AN ACT Relating to termination and restatement of plan 1 of the law enforcement officers' and fire fighters' retirement system; amending RCW 41.26.010, 41.26.040, 41.26.061, 44.44.040, 48.62.031, 48.62.051, 2.10.155, 26.09.138, 36.28A.010, 41.04.205, 41.04.270, 41.04.350, 41.04.400, 41.05.320, 41.18.210, 41.20.170, 41.20.175, 41.24.400, 41.32.800, 41.32.860, 41.35.230, 41.40.690, 41.40.850, 41.45.010, 41.45.010, 41.45.020, 41.45.050, 41.45.050, 41.45.070, 41.48.030, 41.48.050, 41.50.030, 41.50.055, 41.50.075, 41.50.075, 41.50.080, 41.50.090, 41.50.110, 41.50.112, 41.50.150, 41.50.255, 41.50.500, 41.50.500, 41.50.670, 43.84.092, 43.84.092, 43.79A.040, 46.52.130, and 72.72.060; reenacting and amending RCW 41.26.030, 6.15.020, 41.45.020, 41.45.060, 41.45.070, and 41.56.030; adding new chapters to Title 41 RCW; creating new sections; repealing RCW 41.26.005, 41.26.035, 41.26.045, 41.26.046, 41.26.047, 41.26.075, 41.26.080, 41.26.090, 41.26.100, 41.26.110, 41.26.115, 41.26.120, 41.26.125, 41.26.130, 41.26.135, 41.26.140, 41.26.150, 41.26.160, 41.26.161, 41.26.162, 41.26.170, 41.26.190, 41.26.192, 41.26.194, 41.26.195, 41.26.197, 41.26.200, 41.26.211, 41.26.221, 41.26.240, 41.26.250, 41.26.260, 41.26.270, 41.26.281, 41.26.3901, 41.26.3902, 41.26.3903, and 41.26.410; providing effective dates; and providing an expiration date.

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

NEW SECTION. Sec. 1. LEGISLATIVE FINDINGS AND DECLARATION. Plan 1 of the Washington law enforcement officers' and fire fighters' retirement system (LEOFF plan 1) has been closed to new members for nearly a quarter of a century. During that time, LEOFF plan 1 has achieved full funding and has assets which exceed all projected future liabilities and has a surplus approaching one billion dollars. In recognition of the contributions of working fire fighters and police officers to LEOFF plan 1, it is the purpose of this chapter, in part, to provide for an enhanced retirement benefit to LEOFF plan 1 members.

LEOFF plan 1 also provides substantial postretirement health and long-term care benefits. The financial burden of this benefit, which is an integral part of LEOFF plan 1, falls exclusively on the cities, counties, and fire districts that employed the retired fire fighters and police officers. In recognition of the fiscal burdens facing these political subdivisions, it is appropriate to provide an additional source of funding to ensure the integrity of the benefit without undermining the financial stability of the employing governments.

The supreme court of the state of Washington, in the 1956 decision Bakenhus v. City of Seattle, established that the fire fighters and police officers, active and retired, have a constitutionally protected contractual right to a secure retirement benefit, funded on a sound actuarial basis. The legislature recognizes that the state of Washington is the ultimate guarantor of the LEOFF plan 1 retirement benefits. While members have a constitutionally protected right to the pension benefits that are provided as part of their contract of employment, there is no such right in surplus assets which are unnecessary to the actuarial soundness of the retirement plan.

The state retains the inherent power to terminate a retirement plan and, upon the dedication of sufficient resources to ensure the actuarial soundness of the benefits promised, is entitled to a reversion of the surplus assets upon termination of the plan.

The legislature has determined that, in order to accomplish the foregoing goals and objectives, it is in the best interest of the members and beneficiaries of LEOFF plan 1 that the plan be terminated and that a restated retirement plan with enhanced benefits be created. It is further determined to be in the best interest of the health, safety, and welfare of the citizens of the state that surplus assets remaining after adequate actuarial provision for the obligated retirement benefits revert to the state and be allocated for the purposes outlined in this chapter.

It is the intent of the legislature that the LEOFF plan 1 termination be performed in accordance with the applicable provisions of the federal internal revenue code and in recognition of the contract rights of the members and beneficiaries of the plan to an actuarially sound retirement program.

NEW SECTION. Sec. 2. TERMINATION OF LEOFF PLAN 1. Plan 1 of the Washington law enforcement officers' and fire fighters' retirement system (LEOFF plan 1) is hereby terminated. During the transition between the termination of LEOFF plan 1 and the establishment of the restated law enforcement officers' and fire fighters' retirement system, all LEOFF plan 1 benefits, as they existed prior to December 1, 2001, shall continue without interruption.

NEW SECTION. Sec. 3. RESTATED LAW ENFORCEMENT OFFICERS' AND FIRE FIGHTERS' RETIREMENT SYSTEM ESTABLISHED. The restated law enforcement officers' and fire fighters' retirement system is hereby established as provided in this chapter. The restated law enforcement officers' and fire fighters' retirement system established by this chapter may also be referred to by statute and rule as the law enforcement officers' and fire fighters' retirement system plan 1.

NEW SECTION. Sec. 4. RESTATED LAW ENFORCEMENT OFFICERS' AND FIRE FIGHTERS' DEFINED BENEFIT RETIREMENT FUND ESTABLISHED. (1) The restated law enforcement officers' and fire fighters' defined benefit retirement fund is created in the custody of the state treasurer. The fund shall consist of assets transferred from the Washington law enforcement officers' and fire fighters' system plan 1 retirement fund, investment earnings, and other amounts deposited to the fund. On direction of the director of retirement systems, the state treasurer shall transfer to the restated defined benefit retirement fund an amount equal to the actuarial present value of the fully projected liabilities of plan 1 of the Washington law enforcement officers' and fire fighters' retirement system based on the actuarial valuation for calendar year 2000, adjusted to the transfer date, and the long-term economic assumptions in effect on July 1, 2001, under chapter 41.45 RCW. For purposes of funding the plan 1 lump-sum defined benefit created in section 6 of this act, on direction of the director of retirement systems, the state treasurer shall also transfer an amount to the restated defined benefit retirement fund equal to twelve percent of the assets in the Washington law enforcement officers' and fire fighters' system plan 1 retirement fund in excess of the actuarial present value of the fully projected liabilities of plan 1, as calculated under this subsection.

(2) The pension funding council shall conduct an independent audit of the calculation of the present value amount determined by the state actuary. The transfer of these assets to the restated defined benefit retirement fund shall occur as soon as practical after December 1, 2001. The remaining assets in the law enforcement officers' and fire fighters' system plan 1 retirement fund shall continue to be invested by the state investment board until the transfers occur under sections 5 and 8 of this act.

(3) Expenditures from the restated law enforcement officers' and fire fighters' defined benefit retirement fund may be used only for the purposes of this chapter. Only the director of retirement systems or the director's designee may authorize expenditures from the fund. No appropriation is required for expenditures.

(4) The director of retirement systems may direct the state treasurer, subsequent to the initial transfer of assets under sections 1 through 8 of this act, to make such additional transfers as are necessary to reconcile the amounts transferred and the requirements of sections 1 through 8 of this act.

NEW SECTION. Sec. 5. STATE SURPLUS ASSETS RESERVE FUND ESTABLISHED. (1) The state surplus assets reserve fund is created in the state treasury. By December 1, 2001, the state surplus assets reserve fund shall receive all assets of the Washington law enforcement officers' and fire fighters' system plan 1 retirement fund remaining after (a) the distributions to the restated law enforcement officers' and fire fighters' defined benefit retirement fund required by section 4 of this act; and (b) the distribution to the law enforcement officers' and fire fighters' medical benefits risk pool under section 8 of this act and chapter 41.--- RCW (sections 301 through 310 of this act).

(2) Sufficient assets shall be maintained in the state surplus assets reserve fund at all times to ensure the actuarial soundness of the defined benefits of the restated law enforcement officers' and fire fighters' defined benefit retirement plan without the necessity of further employee or employer contributions. Any actuarial shortfall in the defined benefit plan shall be amortized in equal installments over a period not to exceed fifteen years. Payments required by this subsection shall be made first from the assets of the state surplus assets reserve fund. The state investment board shall develop an investment policy, taking into account the purposes of the reserve fund and the preservation of capital, for the purpose of accomplishing the objective of this section.

(3) The office of the state actuary shall perform an annual actuarial valuation of the restated law enforcement officers' and fire fighters' defined benefit plan to determine its continued actuarial soundness. Such sums shall be transferred by the legislature from the state surplus assets reserve fund as may be necessary under subsection (2) of this section to maintain the actuarial soundness of the defined benefit plan.

(4) Subject to the actuarial needs of the restated law enforcement officers' and fire fighters' defined benefit plan, the remaining assets of the reserve fund shall be retained as a budget reserve and may be expended exclusively to fund any unfunded actuarial accrued liabilities of the public retirement systems under chapter 41.45 RCW, and for other one-time costs of the state. Except as required by subsection (2) of this section, no appropriation shall be made from the reserve fund for any fiscal year unless the office of the state actuary has certified that the restated law enforcement officers' and fire fighters' defined benefit plan remains fully funded on a sound actuarial basis. No appropriation shall be made from the reserve fund that would reduce the fund balance below two hundred twenty million dollars unless the state actuary has certified that the defined benefit plan assets are greater than one hundred twenty-five percent of the present value of the fully projected liabilities of the defined benefit plan.

NEW SECTION. Sec. 6. LUMP-SUM DEFINED BENEFIT. (1) The amount equal to twelve percent of the excess assets of the Washington law enforcement officers' and fire fighters' system plan 1 retirement fund transferred to the restated defined benefit retirement fund by section 4 of this act shall fund the plan 1 lump-sum defined benefit created by this section.

(2) Law enforcement officers' and fire fighters' plan 1 active members, term-vested members, retirees, and spousal survivors eligible for benefits under sections 226, 227, and 228 of this act shall be eligible to receive the plan 1 lump-sum defined benefit pursuant to the conditions established in this section. All assets identified in subsection (1) of this section shall be allocated to the eligible recipients of the plan 1 lump-sum defined benefit. The allocation to each eligible recipient shall be based on the number of months of service credit earned under chapter 41.26 RCW through June 30, 2000, or credited pursuant to RCW 41.26.040, in proportion to the total months of such service credit earned by all eligible recipients. The allocations for eligible recipients who are spousal survivors or dependents shall be based on the number of months of such service credit earned by the deceased member. This distribution shall occur on the date of the transfer of assets to the restated defined benefit retirement fund in section 4 of this act, or as soon thereafter as is practical and reasonable, consistent with applicable provisions of the federal internal revenue code.

(3) If a member is active or term-vested, interest as determined by the director shall accumulate from the date the lump-sum defined benefit is allocated until distribution to the participant upon retirement from service or for disability. For the purposes of this section, a term-vested member is a member who has rendered five years of service, has not withdrawn his or her member contributions, and who has not applied for retirement.

(4) If a member dies before distribution of the lump-sum benefit created in this section occurs, the distribution shall be made according to the member's designation in section 216 of this act.

(5) The lump-sum benefit created in this section is subject to the provisions of section 209 of this act.

(6) If this section is held to be invalid, by section 503 of this act or otherwise, recipients of the lump-sum benefit provided by this section shall no longer be entitled to this benefit and shall be required to return any funds received according to the provisions of RCW 41.50.135, 41.50.136, 41.50.137, and 41.50.138.

NEW SECTION. Sec. 7. INVESTMENT OF FUNDS. (1) The state investment board has the full power to invest, reinvest, manage, contract, sell, or exchange investment money in (a) the restated law enforcement officers' and fire fighters' defined benefit retirement fund, (b) the law enforcement officers' and fire fighters' medical benefits risk pool account, and (c) the state surplus assets reserve fund. All investment and operating costs of the state investment board and the state treasurer associated with these funds shall be paid under RCW 43.08.190, 43.33A.160, 43.79A.040, and 43.84.160. With the exception of these expenses, the earnings from the investment of the funds shall be retained by the funds.

(2) All investments made by the state investment board shall be made with the exercise of that degree of judgment and care under RCW 43.33A.140 and the investment policy established by the state investment board.

(3) As deemed appropriate by the state investment board, money in the funds may be commingled for investment with other funds under the investment authority of the board.

NEW SECTION. Sec. 8. TRANSFER TO LEOFF MEDICAL BENEFITS RISK POOL. By December 1, 2001, the state treasurer shall transfer from the Washington law enforcement officers' and fire fighters' system plan 1 retirement fund to the law enforcement officers' and fire fighters' medical benefits risk pool account under chapter 41.--- RCW (sections 301 through 310 of this act) an amount equal to the transfer to the restated law enforcement officers' and fire fighters' defined benefit fund made for purposes of funding the plan 1 lump-sum defined benefit required by section 6 of this act. The distribution shall be for the exclusive purposes of chapter 41.--- RCW (sections 301 through 310 of this act).

NEW SECTION. Sec. 9. RESERVATION OF RIGHTS. The legislature reserves the right to make such amendments and modifications as may be necessary in the future to accomplish the goals of sections 1 through 10 of this act, without any diminution of the rights and benefits of the LEOFF plan 1 members, retirees, and surviving spouses, as they existed prior to December 1, 2001.

NEW SECTION. Sec. 10. STATUTE OF LIMITATIONS. Any claim filed challenging the validity of sections 1 through 10 of this act not filed before July 1, 2002, is forever barred, if not already barred by an otherwise applicable statute of limitations. By December 31, 2001, the department of retirement systems shall send notification of the provisions of sections 1 through 10 of this act, by first class mail, to the last known address of each plan 1 active member, retiree, and spousal survivor.

PART I

AMENDMENTS TO CHAPTER 41.26 RCW

Sec. 101. RCW 41.26.010 and 1969 ex.s. c 209 s 1 are each amended to read as follows:

This chapter shall be known and cited as the "Washington Law Enforcement Officers' and Fire Fighters' Retirement System‑-Plan 2 Act".

Sec. 102. RCW 41.26.030 and 1996 c 178 s 11 and 1996 c 38 s 2 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 "Washington law enforcement officers' and fire fighters' retirement system plan 2" provided herein.

(2)(((a) "Employer" for plan 1 members, means the legislative authority of any city, town, county, or district or the elected officials of any municipal corporation that employs any law enforcement officer and/or fire fighter, any authorized association of such municipalities, and, except for the purposes of RCW 41.26.150, any labor guild, association, or organization, which represents the fire fighters or law enforcement officers of at least seven cities of over 20,000 population and the membership of each local lodge or division of which is composed of at least sixty percent law enforcement officers or fire fighters as defined in this chapter.

~~(b)~~)) "Employer" ((~~for plan 2 members,~~)) means the following entities to the extent that the entity employs any law enforcement officer and/or fire fighter:

((~~(i)~~)) (a) The legislative authority of any city, town, county, or district;

((~~(ii)~~)) (b) The elected officials of any municipal corporation;

((~~(iii)~~)) (c) The governing body of any other general authority law enforcement agency; or

((~~(iv)~~)) (d) A four-year institution of higher education having a fully operational fire department as of January 1, 1996.

(3) "Law enforcement officer" beginning January 1, 1994, means any person who is commissioned and employed by an employer on a full time, fully compensated basis to enforce the criminal laws of the state of Washington generally, with the following qualifications:

(a) No person who is serving in a position that is basically clerical or secretarial in nature, and who is not commissioned shall be considered a law enforcement officer;

(b) Only those deputy sheriffs, including those serving under a different title pursuant to county charter, who have successfully completed a civil service examination for deputy sheriff or the equivalent position, where a different title is used, and those persons serving in unclassified positions authorized by RCW 41.14.070 except a private secretary will be considered law enforcement officers;

(c) Only such full time commissioned law enforcement personnel as have been appointed to offices, positions, or ranks in the police department which have been specifically created or otherwise expressly provided for and designated by city charter provision or by ordinance enacted by the legislative body of the city shall be considered city police officers;

(d) ((The term "law enforcement officer" also includes the executive secretary of a labor guild, association or organization (which is an employer under RCW 41.26.030(2)) if that individual has five years previous membership in the retirement system established in chapter 41.20 RCW. The provisions of this subsection (3)(d) shall not apply to plan 2 members; and

~~(e)~~)) The term "law enforcement officer" also includes a person employed on or after January 1, 1993, as a public safety officer or director of public safety, so long as the job duties substantially involve only either police or fire duties, or both, and no other duties in a city or town with a population of less than ten thousand. The provisions of this subsection (3)((~~(e)~~)) (d) shall not apply to any public safety officer or director of public safety who is receiving a retirement allowance under this chapter as of May 12, 1993.

(4) "Fire fighter" means:

(a) Any person who is serving on a full time, fully compensated basis as a member of a fire department of an employer and who is serving in a position which requires passing a civil service examination for fire fighter, and who is actively employed as such;

(b) Anyone who is actively employed as a full time fire fighter where the fire department does not have a civil service examination;

(d) ((~~Any full time executive secretary of an association of fire protection districts authorized under RCW 52.12.031. The provisions of this subsection (4)(d) shall not apply to plan 2 members;~~

(e) The executive secretary of a labor guild, association or organization (which is an employer under RCW 41.26.030(2) as now or hereafter amended), if such individual has five years previous membership in a retirement system established in chapter 41.16 or 41.18 RCW. The provisions of this subsection (4)(e) shall not apply to plan 2 members;

~~(f)~~)) Any person who is serving on a full time, fully compensated basis for an employer, as a fire dispatcher, in a department in which, on March 1, 1970, a dispatcher was required to have passed a civil service examination for fire fighter((~~; and~~

(g) Any person who on March 1, 1970, was employed on a full time, fully compensated basis by an employer, and who on May 21, 1971, was making retirement contributions under the provisions of chapter 41.16 or 41.18 RCW)).

(5) "Department" means the department of retirement systems created in chapter 41.50 RCW.

(6) "Surviving spouse" means the surviving widow or widower of a member. ((~~"Surviving spouse" shall not include the divorced spouse of a member except as provided in RCW 41.26.162.~~))

(7)(a) "Child" or "children" means an unmarried person who is under the age of eighteen or mentally or physically handicapped as determined by the department, except a handicapped person in the full time care of a state institution, who is:

(i) A natural born child;

(ii) A stepchild where that relationship was in existence prior to the date benefits are payable under this chapter;

(iii) A posthumous child;

(iv) A child legally adopted or made a legal ward of a member prior to the date benefits are payable under this chapter; or

(v) An illegitimate child legitimized prior to the date any benefits are payable under this chapter.

(b) A person shall also be deemed to be a child up to and including the age of twenty years and eleven months while attending any high school, college, or vocational or other educational institution accredited, licensed, or approved by the state, in which it is located, including the summer vacation months and all other normal and regular vacation periods at the particular educational institution after which the child returns to school.

(8) "Member" means any fire fighter, law enforcement officer, or other person as would apply under subsection((s)) (3) or (4) of this section ((~~whose membership is transferred to the Washington law enforcement officers' and fire fighters' retirement system on or after March 1, 1970, and every law enforcement officer and fire fighter~~)) who is employed in that capacity on or after ((~~such date~~)) October 1, 1977.

(9) "Retirement fund" means the "Washington law enforcement officers' and fire fighters' ((~~retirement~~)) system plan 2 retirement fund" as provided for ((~~herein~~)) in RCW 41.50.075.

(10) "Employee" means any law enforcement officer or fire fighter as defined in subsections (3) and (4) of this section.

(11)((~~(a) "Beneficiary" for plan 1 members, means any person in receipt of a retirement allowance, disability allowance, death benefit, or any other benefit described herein.~~

~~(b)~~)) "Beneficiary" ((~~for plan 2 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.

(12)(((a) "Final average salary" for plan 1 members, means (i) for a member holding the same position or rank for a minimum of twelve months preceding the date of retirement, the basic salary attached to such same position or rank at time of retirement; (ii) for any other member, including a civil service member who has not served a minimum of twelve months in the same position or rank preceding the date of retirement, the average of the greatest basic salaries payable to such member during any consecutive twenty-four month period within such member's last ten years of service for which service credit is allowed, computed by dividing the total basic salaries payable to such member during the selected twenty-four month period by twenty-four; (iii) in the case of disability of any member, the basic salary payable to such member at the time of disability retirement; (iv) in the case of a member who hereafter vests pursuant to RCW 41.26.090, the basic salary payable to such member at the time of vesting.

~~(b)~~)) "Final average salary" ((~~for plan 2 members,~~)) means the monthly average of the member's basic salary for the highest consecutive sixty service credit months of service prior to such member's retirement, termination, or death. Periods constituting authorized unpaid leaves of absence may not be used in the calculation of final average salary.

(13)(((a) "Basic salary" for plan 1 members, means the basic monthly rate of salary or wages, including longevity pay but not including overtime earnings or special salary or wages, upon which pension or retirement benefits will be computed and upon which employer contributions and salary deductions will be based.

~~(b)~~)) "Basic salary" ((~~for plan 2 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. In any year in which a member serves in the legislature the member shall have the option of having such member's basic salary be the greater of:

((~~(i)~~)) (a) The basic salary the member would have received had such member not served in the legislature; or

((~~(ii)~~)) (b) Such member's actual basic salary received for nonlegislative public employment and legislative service combined. Any additional contributions to the retirement system required because basic salary under ((~~(b)(i)~~)) (a) of this subsection is greater than basic salary under (b)((~~(ii)~~)) of this subsection shall be paid by the member for both member and employer contributions.

(14)(((a) "Service" for plan 1 members, means all periods of employment for an employer as a fire fighter or law enforcement officer, for which compensation is paid, together with periods of suspension not exceeding thirty days in duration. For the purposes of this chapter service shall also include service in the armed forces of the United States as provided in RCW 41.26.190. Credit shall be allowed for all service credit months of service rendered by a member from and after the member's initial commencement of employment as a fire fighter or law enforcement officer, during which the member worked for seventy or more hours, or was on disability leave or disability retirement. Only service credit months of service shall be counted in the computation of any retirement allowance or other benefit provided for in this chapter.

(i) For members retiring after May 21, 1971 who were employed under the coverage of a prior pension act before March 1, 1970, "service" shall also include (A) such military service not exceeding five years as was creditable to the member as of March 1, 1970, under the member's particular prior pension act, and (B) such other periods of service as were then creditable to a particular member under the provisions of RCW 41.18.165, 41.20.160 or 41.20.170. However, in no event shall credit be allowed for any service rendered prior to March 1, 1970, where the member at the time of rendition of such service was employed in a position covered by a prior pension act, unless such service, at the time credit is claimed therefor, is also creditable under the provisions of such prior act.

~~(ii) A member who is employed by two employers at the same time shall only be credited with service to one such employer for any month during which the member rendered such dual service.~~

~~(b)~~)) "Service" ((~~for plan 2 members,~~)) means periods of employment by a member for one or more employers for which basic salary is earned for ninety or more hours per calendar month which shall constitute a service credit month. Periods of employment by a member for one or more employers for which basic salary is earned for at least seventy hours but less than ninety hours per calendar month shall constitute one-half service credit month. Periods of employment by a member for one or more employers for which basic salary is earned for less than seventy hours shall constitute a one-quarter service credit month.

Members of the retirement system who are elected or appointed to a state elective position may elect to continue to be members of this retirement system.

Service credit years of service shall be determined by dividing the total number of service credit months of service by twelve. Any fraction of a service credit year of service as so determined shall be taken into account in the computation of such retirement allowance or benefits.

If a member receives basic salary from two or more employers during any calendar month, the individual shall receive one service credit month's service credit during any calendar month in which multiple service for ninety or more hours is rendered; or one-half service credit month's service credit during any calendar month in which multiple service for at least seventy hours but less than ninety hours is rendered; or one-quarter service credit month during any calendar month in which multiple service for less than seventy hours is rendered.

(15) "Accumulated contributions" means the employee's contributions made by a member, including any amount paid under RCW 41.50.165(2), plus accrued interest credited thereon.

(16) "Actuarial reserve" means a method of financing a pension or retirement plan wherein reserves are accumulated as the liabilities for benefit payments are incurred in order that sufficient funds will be available on the date of retirement of each member to pay the member's future benefits during the period of retirement.

(17) "Actuarial valuation" means a mathematical determination of the financial condition of a retirement plan. It includes the computation of the present monetary value of benefits payable to present members, and the present monetary value of future employer and employee contributions, giving effect to mortality among active and retired members and also to the rates of disability, retirement, withdrawal from service, salary and interest earned on investments.

(18) ((~~"Disability board" for plan 1 members means either the county disability board or the city disability board established in RCW 41.26.110.~~

(19) "Disability leave" means the period of six months or any portion thereof during which a member is on leave at an allowance equal to the member's full salary prior to the commencement of disability retirement. The definition contained in this subsection shall apply only to plan 1 members.

~~(20) "Disability retirement" for plan 1 members, means the period following termination of a member's disability leave, during which the member is in receipt of a disability retirement allowance.~~

~~(21)~~)) "Position" means the employment held at any particular time, which may or may not be the same as civil service rank.

((~~(22) "Medical services" for plan 1 members, shall include the following as minimum services to be provided. Reasonable charges for these services shall be paid in accordance with RCW 41.26.150.~~

~~(a) Hospital expenses: These are the charges made by a hospital, in its own behalf, for~~

~~(i) Board and room not to exceed semiprivate room rate unless private room is required by the attending physician due to the condition of the patient.~~

~~(ii) Necessary hospital services, other than board and room, furnished by the hospital.~~

~~(b) Other medical expenses: The following charges are considered "other medical expenses", provided that they have not been considered as "hospital expenses".~~

~~(i) The fees of the following:~~

~~(A) A physician or surgeon licensed under the provisions of chapter 18.71 RCW;~~

~~(B) An osteopathic physician and surgeon licensed under the provisions of chapter 18.57 RCW;~~

~~(C) A chiropractor licensed under the provisions of chapter 18.25 RCW.~~

~~(ii) The charges of a registered graduate nurse other than a nurse who ordinarily resides in the member's home, or is a member of the family of either the member or the member's spouse.~~

~~(iii) The charges for the following medical services and supplies:~~

~~(A) Drugs and medicines upon a physician's prescription;~~

~~(B) Diagnostic x-ray and laboratory examinations;~~

~~(C) X-ray, radium, and radioactive isotopes therapy;~~

~~(D) Anesthesia and oxygen;~~

~~(E) Rental of iron lung and other durable medical and surgical equipment;~~

~~(F) Artificial limbs and eyes, and casts, splints, and trusses;~~

~~(G) Professional ambulance service when used to transport the member to or from a hospital when injured by an accident or stricken by a disease;~~

~~(H) Dental charges incurred by a member who sustains an accidental injury to his or her teeth and who commences treatment by a legally licensed dentist within ninety days after the accident;~~

~~(I) Nursing home confinement or hospital extended care facility;~~

~~(J) Physical therapy by a registered physical therapist;~~

~~(K) Blood transfusions, including the cost of blood and blood plasma not replaced by voluntary donors;~~

~~(L) An optometrist licensed under the provisions of chapter 18.53 RCW.~~

~~(23)~~)) (19) "Regular interest" means such rate as the director may determine.

((~~(24)~~)) (20) "Retiree" ((~~for persons who establish membership in the retirement system on or after October 1, 1977,~~)) means any member in receipt of a retirement allowance or other benefit provided by this chapter resulting from service rendered to an employer by such member.

((~~(25)~~)) (21) "Director" means the director of the department.

((~~(26)~~)) (22) "State actuary" or "actuary" means the person appointed pursuant to RCW 44.44.010(2).

((~~(27)~~)) (23) "State elective position" means any position held by any person elected or appointed to statewide office or elected or appointed as a member of the legislature.

((~~(28)~~)) (24) "Plan 1" means the law enforcement officers' and fire fighters' retirement system, plan 1 providing the benefits and funding provisions covering persons who first became members of the system prior to October 1, 1977, which plan was terminated effective December 1, 2001, and members transferred to the retirement system established by chapter 41.26A RCW.

((~~(29)~~)) (25) "Plan 2" means the law enforcement officers' and fire fighters' retirement system, plan 2 providing the benefits and funding provisions covering persons who first became members of the system on and after October 1, 1977.

((~~(30)~~)) (26) "Service credit year" means an accumulation of months of service credit which is equal to one when divided by twelve.

((~~(31)~~)) (27) "Service credit month" means a full service credit month or an accumulation of partial service credit months that are equal to one.

((~~(32)~~)) (28) "General authority law enforcement agency" means any agency, department, or division of a municipal corporation, political subdivision, or other unit of local government of this state, and any agency, department, or division of state government, having as its primary function the detection and apprehension of persons committing infractions or violating the traffic or criminal laws in general, but not including the Washington state patrol. Such an agency, department, or division is distinguished from a limited authority law enforcement agency having as one of its functions the apprehension or detection of persons committing infractions or violating the traffic or criminal laws relating to limited subject areas, including but not limited to, the state departments of natural resources, fish and wildlife, and social and health services, the state gambling commission, the state lottery commission, the state parks and recreation commission, the state utilities and transportation commission, the state liquor control board, and the state department of corrections.

Sec. 103. RCW 41.26.040 and 1991 c 35 s 15 are each amended to read as follows:

The Washington law enforcement officers' and fire fighters' retirement system plan 2 is hereby created for fire fighters and law enforcement officers.

(1) ((~~Notwithstanding RCW 41.26.030(8),~~)) All fire fighters and law enforcement officers employed as such on or after ((~~March 1, 1970~~)) October 1, 1977, on a full time fully compensated basis in this state shall be members of the retirement system established by this chapter with respect to all periods of service as such, to the exclusion of any pension system existing under any prior act.

(2) ((Any employee serving as a law enforcement officer or fire fighter on March 1, 1970, who is then making retirement contributions under any prior act shall have his membership transferred to the system established by this chapter as of such date. Upon retirement for service or for disability, or death, of any such employee, his retirement benefits earned under this chapter shall be computed and paid. In addition, his benefits under the prior retirement act to which he was making contributions at the time of this transfer shall be computed as if he had not transferred. For the purpose of such computations, the employee's creditability of service and eligibility for service or disability retirement and survivor and all other benefits shall continue to be as provided in such prior retirement act, as if transfer of membership had not occurred. The excess, if any, of the benefits so computed, giving full value to survivor benefits, over the benefits payable under this chapter shall be paid whether or not the employee has made application under the prior act. If the employee's prior retirement system was the Washington public employees' retirement system, payment of such excess shall be made by that system; if the employee's prior retirement system was the statewide city employees' retirement system, payment of such excess shall be made by the employer which was the member's employer when his transfer of membership occurred: PROVIDED, That any death in line of duty lump sum benefit payment shall continue to be the obligation of that system as provided in RCW 41.44.210; in the case of all other prior retirement systems, payment of such excess shall be made by the employer which was the member's employer when his transfer of membership occurred.

~~(3)~~)) All funds held by any firemen's or policemen's relief and pension fund shall remain in that fund for the purpose of paying the obligations of the fund. The municipality shall continue to levy the dollar rate as provided in RCW 41.16.060, and this dollar rate shall be used for the purpose of paying the benefits provided in chapters 41.16 and 41.18 RCW. The obligations of chapter 41.20 RCW shall continue to be paid from whatever financial sources the city has been using for this purpose.

Sec. 104. RCW 41.26.061 and 1997 c 103 s 1 are each amended to read as follows:

A member shall not receive a disability retirement benefit under RCW ((~~41.26.120, 41.26.125, 41.26.130, or~~)) 41.26.470 if the disability is the result of criminal conduct by the member committed after April 21, 1997.

PART II

CHAPTER 41.26A RCW: RESTATED LEOFF RETIREMENT SYSTEM

NEW SECTION. Sec. 201. APPLICATION OF CHAPTER. This chapter applies to members of the restated law enforcement officers' and fire fighters' retirement system. Membership in the system is limited to those persons who were members of plan 1 of the law enforcement officers' and fire fighters' retirement system under chapter 41.26 RCW prior to December 1, 2001.

NEW SECTION. Sec. 202. DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Retirement system" means the restated law enforcement officers' and fire fighters' retirement system.

(2) "Employer" means the legislative authority of any city, town, county, or district or the elected officials of any municipal corporation that employs any law enforcement officer and/or fire fighter, any authorized association of such municipalities, and, except for the purposes of section 225 of this act, any labor guild, association, or organization, which represents the fire fighters or law enforcement officers of at least seven cities of over twenty thousand population and the membership of each local lodge or division of which is composed of at least sixty percent law enforcement officers or fire fighters as defined in this chapter.

(3) "Law enforcement officer" beginning January 1, 1994, means any person who is commissioned and employed by an employer on a full-time, fully compensated basis to enforce the criminal laws of the state of Washington generally, with the following qualifications:

(a) No person who is serving in a position that is basically clerical or secretarial in nature, and who is not commissioned shall be considered a law enforcement officer;

(c) Only such full-time commissioned law enforcement personnel as have been appointed to offices, positions, or ranks in the police department which have been specifically created or otherwise expressly provided for and designated by city charter provision or by ordinance enacted by the legislative body of the city shall be considered city police officers;

(d) The term "law enforcement officer" also includes the executive secretary of a labor guild, association, or organization (which is an employer under this section) if that individual has five years previous membership in the retirement system established in chapter 41.20 RCW; and

(e) The term "law enforcement officer" also includes a person employed on or after January 1, 1993, as a public safety officer or director of public safety, so long as the job duties substantially involve only either police or fire duties, or both, and no other duties in a city or town with a population of less than ten thousand. The provisions of this subsection (3)(e) shall not apply to any public safety officer or director of public safety who is receiving a retirement allowance under this chapter as of May 12, 1993.

(4) "Fire fighter" means:

(a) Any person who is serving on a full-time, fully compensated basis as a member of a fire department of an employer and who is serving in a position which requires passing a civil service examination for fire fighter, and who is actively employed as such;

(b) Anyone who is actively employed as a full-time fire fighter where the fire department does not have a civil service examination;

(d) Any full-time executive secretary of an association of fire protection districts authorized under RCW 52.12.031;

(e) The executive secretary of a labor guild, association, or organization (which is an employer under this section), if such individual has five years previous membership in a retirement system established in chapter 41.16 or 41.18 RCW;

(f) Any person who is serving on a full-time, fully compensated basis for an employer, as a fire dispatcher, in a department in which, on March 1, 1970, a dispatcher was required to have passed a civil service examination for fire fighter; and

(g) Any person who on March 1, 1970, was employed on a full-time, fully compensated basis by an employer, and who on May 21, 1971, was making retirement contributions under the provisions of chapter 41.16 or 41.18 RCW.

(5) "Department" means the department of retirement systems created in chapter 41.50 RCW.

(6) "Surviving spouse" means the surviving widow or widower of a member. "Surviving spouse" shall not include the divorced spouse of a member except as provided in section 228 of this act.

(i) A natural born child;

(ii) A stepchild where that relationship was in existence prior to the date benefits are payable under this chapter;

(iii) A posthumous child;

(iv) A child legally adopted or made a legal ward of a member prior to the date benefits are payable under this chapter; or

(v) An illegitimate child legitimized prior to the date any benefits are payable under this chapter.

(8) "Member" means any fire fighter, law enforcement officer, or other person as would apply under subsection (3) or (4) of this section whose membership is transferred to the Washington law enforcement officers' and fire fighters' retirement system on or after March 1, 1970, and every law enforcement officer and fire fighter who is employed in that capacity on or after such date.

(9) "Retirement fund" means the restated law enforcement officers' and fire fighters' defined benefit retirement fund.

(10) "Employee" means any law enforcement officer or fire fighter as defined in subsections (3) and (4) of this section.

(11) "Beneficiary" means any person in receipt of a retirement allowance, disability allowance, death benefit, or any other benefit described herein.

(12) "Final average salary" means (a) for a member holding the same position or rank for a minimum of twelve months preceding the date of retirement, the basic salary attached to such same position or rank at time of retirement; (b) for any other member, including a civil service member who has not served a minimum of twelve months in the same position or rank preceding the date of retirement, the average of the greatest basic salaries payable to such member during any consecutive twenty-four month period within such member's last ten years of service for which service credit is allowed, computed by dividing the total basic salaries payable to such member during the selected twenty-four month period by twenty-four; (c) in the case of disability of any member, the basic salary payable to such member at the time of disability retirement; (d) in the case of a member who hereafter vests pursuant to section 216 of this act, the basic salary payable to such member at the time of vesting.

(13) "Basic salary" means the basic monthly rate of salary or wages, including longevity pay but not including overtime earnings or special salary or wages, upon which pension or retirement benefits will be computed and upon which employer contributions and salary deductions will be based.

(14) "Service" means all periods of employment for an employer as a fire fighter or law enforcement officer, for which compensation is paid, together with periods of suspension not exceeding thirty days in duration. For the purposes of this chapter service also includes service in the armed forces of the United States as provided in section 230 of this act. Credit shall be allowed for all service credit months of service rendered by a member from and after the member's initial commencement of employment as a fire fighter or law enforcement officer, during which the member worked for seventy or more hours, or was on disability leave or disability retirement. Only service credit months of service shall be counted in the computation of any retirement allowance or other benefit provided for in this chapter.

(a) For members retiring after May 21, 1971, who were employed under the coverage of a prior pension act before March 1, 1970, "service" also includes (i) such military service not exceeding five years as was creditable to the member as of March 1, 1970, under the member's particular prior pension act, and (ii) such other periods of service as were then creditable to a particular member under the provisions of RCW 41.18.165, 41.20.160 or 41.20.170. However, in no event shall credit be allowed for any service rendered prior to March 1, 1970, where the member at the time of rendition of such service was employed in a position covered by a prior pension act, unless such service, at the time credit is claimed therefor, is also creditable under the provisions of such prior act.

(b) A member who is employed by two employers at the same time shall only be credited with service to one such employer for any month during which the member rendered such dual service.

(15) "Accumulated contributions" means the employee's contributions made by a member, including any amount paid under RCW 41.50.165(2), plus accrued interest credited thereon.

(18) "Disability board" means either the county disability board or the city disability board established in section 218 of this act.

(20) "Disability retirement" means the period following termination of a member's disability leave, during which the member is in receipt of a disability retirement allowance.

(21) "Position" means the employment held at any particular time, which may or may not be the same as civil service rank.

(22) "Medical services" include the following as minimum services to be provided. Reasonable charges for these services shall be paid in accordance with section 225 of this act.

(a) Hospital expenses: These are the charges made by a hospital, in its own behalf, for:

(i) Board and room not to exceed semiprivate room rate unless private room is required by the attending physician due to the condition of the patient.

(ii) Necessary hospital services, other than board and room, furnished by the hospital.

(b) Other medical expenses: The following charges are considered "other medical expenses," provided that they have not been considered as "hospital expenses."

(i) The fees of the following:

(A) A physician or surgeon licensed under the provisions of chapter 18.71 RCW;

(B) An osteopathic physician and surgeon licensed under the provisions of chapter 18.57 RCW;

(ii) The charges of a registered graduate nurse other than a nurse who ordinarily resides in the member's home, or is a member of the family of either the member or the member's spouse.

(iii) The charges for the following medical services and supplies:

(A) Drugs and medicines upon a physician's prescription;

(B) Diagnostic x-ray and laboratory examinations;

(D) Anesthesia and oxygen;

(E) Rental of iron lung and other durable medical and surgical equipment;

(F) Artificial limbs and eyes, and casts, splints, and trusses;

(G) Professional ambulance service when used to transport the member to or from a hospital when injured by an accident or stricken by a disease;

(H) Dental charges incurred by a member who sustains an accidental injury to his or her teeth and who commences treatment by a legally licensed dentist within ninety days after the accident;

(I) Nursing home confinement or hospital extended care facility;

(J) Physical therapy by a registered physical therapist;

(K) Blood transfusions, including the cost of blood and blood plasma not replaced by voluntary donors;

(L) An optometrist licensed under the provisions of chapter 18.53 RCW.

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

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

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

(26) "State elective position" means any position held by any person elected or appointed to statewide office or elected or appointed as a member of the legislature.

(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) "General authority law enforcement agency" means any agency, department, or division of a municipal corporation, political subdivision, or other unit of local government of this state, and any agency, department, or division of state government, having as its primary function the detection and apprehension of persons committing infractions or violating the traffic or criminal laws in general, but not including the Washington state patrol. Such an agency, department, or division is distinguished from a limited authority law enforcement agency having as one of its functions the apprehension or detection of persons committing infractions or violating the traffic or criminal laws relating to limited subject areas, including but not limited to, the state departments of natural resources, fish and wildlife, and social and health services, the state gambling commission, the state lottery commission, the state parks and recreation commission, the state utilities and transportation commission, the state liquor control board, and the state department of corrections.

NEW SECTION. Sec. 203. SYSTEM CREATED‑‑MEMBERSHIP‑‑FUNDS. The restated law enforcement officers' and fire fighters' retirement system is hereby created for fire fighters and law enforcement officers.

(1) Notwithstanding section 202(8) of this act, all fire fighters and law enforcement officers employed as such on or after March 1, 1970, on a full-time fully compensated basis in this state shall be members of the retirement system established by this chapter with respect to all periods of service as such, to the exclusion of any pension system existing under any prior act.

(2) Any employee serving as a law enforcement officer or fire fighter on March 1, 1970, who is then making retirement contributions under any prior act shall have his or her membership transferred to the system established by this chapter as of such date. Upon retirement for service or for disability, or death, of any such employee, his or her retirement benefits earned under this chapter shall be computed and paid. In addition, his or her benefits under the prior retirement act to which he or she was making contributions at the time of this transfer shall be computed as if he or she had not transferred. For the purpose of such computations, the employee's creditability of service and eligibility for service or disability retirement and survivor and all other benefits shall continue to be as provided in such prior retirement act, as if transfer of membership had not occurred. The excess, if any, of the benefits so computed, giving full value to survivor benefits, over the benefits payable under this chapter shall be paid whether or not the employee has made application under the prior act. If the employee's prior retirement system was the Washington public employees' retirement system, payment of such excess shall be made by that system; if the employee's prior retirement system was the statewide city employees' retirement system, payment of such excess shall be made by the employer which was the member's employer when his or her transfer of membership occurred: PROVIDED, That any death in line of duty lump sum benefit payment shall continue to be the obligation of that system as provided in RCW 41.44.210; in the case of all other prior retirement systems, payment of such excess shall be made by the employer which was the member's employer when his or her transfer of membership occurred.

(3) All funds held by any firemen's or policemen's relief and pension fund shall remain in that fund for the purpose of paying the obligations of the fund. The municipality shall continue to levy the dollar rate as provided in RCW 41.16.060, and this dollar rate shall be used for the purpose of paying the benefits provided in chapters 41.16 and 41.18 RCW. The obligations of chapter 41.20 RCW shall continue to be paid from whatever financial sources the city has been using for this purpose.

NEW SECTION. Sec. 204. "MINIMUM MEDICAL AND HEALTH STANDARDS" DEFINED. The term "minimum medical and health standards" means minimum medical and health standards adopted by the department under this chapter.

NEW SECTION. Sec. 205. MINIMUM MEDICAL AND HEALTH STANDARDS. Notwithstanding any other provision of law after February 19, 1974, no law enforcement officer or fire fighter, may become eligible for coverage in the pension system established by this chapter until the individual has met and has been certified as having met minimum medical and health standards: PROVIDED, That an elected sheriff or an appointed chief of police or fire chief, shall not be required to meet the age standard: PROVIDED FURTHER, That in cities and towns having not more than two law enforcement officers and/or not more than two fire fighters and if one or more of such persons do not meet the minimum medical and health standards as required by the provisions of this chapter, then such person or persons may join any other pension system that the city has available for its other employees: AND PROVIDED FURTHER, That for one year after February 19, 1974, any such medical or health standard now existing or hereinafter adopted, insofar as it establishes a maximum age beyond which an applicant is to be deemed ineligible for coverage, shall be waived as to any applicant for employment or reemployment who is otherwise eligible except for his or her age, who has been a member of any one or more of the retirement systems created by chapter 41.20 RCW and who has restored all contributions which he or she has previously withdrawn from any such system or systems.

NEW SECTION. Sec. 206. MINIMUM MEDICAL AND HEALTH STANDARDS‑‑BOARD TO ADOPT‑‑PUBLICATION AND DISTRIBUTION‑‑EMPLOYER CERTIFICATION PROCEDURES. The department shall adopt minimum medical and health standards for membership coverage into the retirement system. In adopting such standards the department shall consider existing standards recommended by the international association of chiefs of police and the international association of fire fighters, and shall adopt equal or higher standards, together with appropriate standards and procedures to ensure uniform compliance with this chapter. The standards when adopted shall be published and distributed to each employer, and each employer shall adopt certification procedures and such other procedures as are required to ensure that no law enforcement officer or fire fighter receives membership coverage unless and until he or she has actually met minimum medical and health standards: PROVIDED, That an elected sheriff or an appointed chief of police, fire chief, or director of public safety shall not be required to meet the age standard. The department may amend the minimum medical and health standards as experience indicates, even if the standards as so amended are lower or less rigid than those recommended by the international associations mentioned above. The cost of the medical examination contemplated by this section is to be paid by the employer.

NEW SECTION. Sec. 207. MINIMUM MEDICAL AND HEALTH STANDARDS‑‑EXEMPTIONS‑‑EMPLOYER MAY ADOPT HIGHER STANDARDS. Nothing in sections 204 through 206 of this act shall apply to any fire fighters or law enforcement officers who are employed as such on or before August 1, 1971, as long as they continue in such employment; nor to promotional appointments after becoming a member in the police or fire department of any employer nor to the reemployment of a law enforcement officer or fire fighter by the same or a different employer within six months after the termination of his or her employment, nor to the reinstatement of a law enforcement officer or fire fighter who has been on military or disability leave, disability retirement status, or leave of absence status. Nothing in this chapter shall be deemed to prevent any employer from adopting higher medical and health standards than those which are adopted by the department.

NEW SECTION. Sec. 208. SPECIAL DEATH BENEFIT‑‑DEATH IN THE COURSE OF EMPLOYMENT. (1) A one hundred fifty thousand dollar death benefit 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. If there be no such designated person or persons still living at the time of the member's death, such member's death benefit shall be paid to the member's surviving spouse as if in fact such spouse had been nominated by written designation, or if there be no such surviving spouse, then to such member's legal representatives.

(2) The benefit under this section shall be paid only where death occurs as a result of injuries sustained in the course of employment. The determination of eligibility for the benefit shall be made consistent with Title 51 RCW by the department of labor and industries. The department of labor and industries shall notify the department of retirement systems by order under RCW 51.52.050.

NEW SECTION. Sec. 209. EXEMPTION FROM JUDICIAL PROCESS, TAXES‑‑EXCEPTIONS‑‑DEDUCTION FOR INSURANCE UPON REQUEST. (1) Subject to subsections (2) and (3) of this section, the right of a person to a retirement allowance, disability allowance, or death benefit, to the return of accumulated contributions, the retirement, disability, or death allowance itself, any optional benefit, any other right accrued or accruing to any person under the provisions of this chapter, and the moneys in the fund created under this chapter, are hereby exempt from any state, county, municipal, or other local tax and shall not be subject to execution, garnishment, attachment, the operation of bankruptcy or insolvency laws, or any other process of law whatsoever, and shall be unassignable.

(2) On the written request of any person eligible to receive benefits under this section, the department may deduct from such payments the premiums for life, health, or other insurance. The request on behalf of any child or children shall be made by the legal guardian of such child or children. The department may provide for such persons one or more plans of group insurance, through contracts with regularly constituted insurance carriers or health care service contractors.

(3) Subsection (1) of this section shall not prohibit the department from complying with (a) a wage assignment order for child support issued pursuant to chapter 26.18 RCW, (b) an order to withhold and deliver issued pursuant to chapter 74.20A RCW, (c) a notice of payroll deduction issued pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order issued by the department, (e) a court order directing the department to pay benefits directly to an obligee under a dissolution order as defined in RCW 41.50.500(3) which fully complies with RCW 41.50.670 and 41.50.700, or (f) any administrative or court order expressly authorized by federal law.

NEW SECTION. Sec. 210. NO BOND REQUIRED ON APPEAL TO COURT. No bond of any kind shall be required of a claimant appealing to the superior court, the court of appeals, or the supreme court from a decision of the director affecting such claimant's right to retirement or disability benefits.

NEW SECTION. Sec. 211. BENEFIT CALCULATION‑‑LIMITATION. (1) The annual compensation taken into account in calculating retiree benefits under this system shall not exceed the limits imposed by section 401(a)(17) of the federal internal revenue code for qualified trusts.

(2) The department shall adopt rules as necessary to implement this section.

NEW SECTION. Sec. 212. ESTABLISHING, RESTORING SERVICE CREDIT. Notwithstanding any provision to the contrary, persons who fail to:

(1) Establish allowable membership service not previously credited;

(2) Restore all or a part of that previously credited membership service represented by withdrawn contributions; or

(3) Restore service credit represented by a lump sum payment in lieu of benefits, before the deadline established by statute, may do so under the conditions set forth in RCW 41.50.165.

NEW SECTION. Sec. 213. DISABILITY RETIREMENT‑‑CRIMINAL CONDUCT. A member shall not receive a disability retirement benefit under sections 220 through 222 of this act if the disability is the result of criminal conduct by the member committed after April 21, 1997.

NEW SECTION. Sec. 214. FALSIFICATION‑‑PENALTY. Any employer, member, or beneficiary who knowingly makes false statements or falsifies or permits to be falsified any record or records of the retirement system in an attempt to defraud the retirement system, is guilty of a felony.

NEW SECTION. Sec. 215. FUNDING TOTAL LIABILITY OF SYSTEM. No employer or member contribution is required. The total liability of the retirement system is funded as provided in sections 4 and 5 of this act.

NEW SECTION. Sec. 216. RETIREMENT FOR SERVICE. Retirement of a member for service shall be made by the department as follows:

(1) Any member having five or more service credit years of service and having attained the age of fifty years shall be eligible for a service retirement allowance and shall be retired upon the member's written request effective the first day following the date upon which the member is separated from service.

(2) Any member having five or more service credit years of service, who terminates his or her employment with any employer, may leave his or her contributions in the fund. Any employee who so elects, upon attaining age fifty, shall be eligible to apply for and receive a service retirement allowance based on his or her years of service, commencing on the first day following his or her attainment of age fifty.

(3) Any member selecting optional vesting under subsection (2) of this section with less than twenty service credit years of service shall not be covered by the provisions of section 225 of this act, and the member's survivors shall not be entitled to the benefits of section 226 of this act unless his or her death occurs after he or she has attained the age of fifty years. Those members selecting this optional vesting with twenty or more years service shall not be covered by the provisions of section 225 of this act until the attainment of the age of fifty years. A member selecting this optional vesting, with less than twenty service credit years of service credit, who dies prior to attaining the age of fifty years, shall have paid from the restated law enforcement officers' and fire fighters' defined benefit retirement fund, to such member's surviving spouse, if any, otherwise to such beneficiary as the member shall have designated in writing, or if no such designation has been made, to the personal representative of his or her estate, a lump sum which is equal to the amount of such member's accumulated contributions plus accrued interest. If the vested member has twenty or more service credit years of service credit the surviving spouse or children shall then become eligible for the benefits of section 226 of this act regardless of the member's age at the time of his or her death, to the exclusion of the lump sum amount provided by this subsection.

(4) Any member who has attained the age of sixty years shall be retired on the first day of the calendar month next succeeding that in which said member shall have attained the age of sixty and may not thereafter be employed as a law enforcement officer or fire fighter: PROVIDED, That for any member who is elected or appointed to the office of sheriff, chief of police, or fire chief, his or her election or appointment shall be considered as a waiver of the age sixty provision for retirement and nonemployment for whatever number of years remain in his or her present term of office and any succeeding periods for which he or she may be so elected or appointed. The provisions of this subsection shall not apply to any member who is employed as a law enforcement officer or fire fighter on March 1, 1970.

NEW SECTION. Sec. 217. ALLOWANCE ON RETIREMENT FOR SERVICE. A member upon retirement for service shall receive a monthly retirement allowance computed according to his or her completed creditable service credit years of service as follows: Five years but under ten years, one-twelfth of one percent of his or her final average salary for each month of service; ten years but under twenty years, one-twelfth of one and one-half percent of his or her final average salary for each month of service; and twenty years and over one-twelfth of two percent of his or her final average salary for each month of service: PROVIDED, That the recipient of a retirement allowance who shall return to service as a law enforcement officer or fire fighter shall be considered to have terminated his or her retirement status and he or she shall immediately become a member of the retirement system with the status of membership he or she had as of the date of retirement. Retirement benefits shall be suspended during the period of his or her return to service and he or she shall make contributions and receive service credit. Such a member shall have the right to again retire at any time and his or her retirement allowance shall be recomputed, and paid, based upon additional service rendered and any change in final average salary: PROVIDED FURTHER, That no retirement allowance paid pursuant to this section shall exceed sixty percent of final average salary, except as such allowance may be increased by virtue of section 238 of this act.

NEW SECTION. Sec. 218. CITY AND COUNTY DISABILITY BOARDS AUTHORIZED. (1) All claims for disability shall be acted upon and either approved or disapproved by either type of disability board created under this section.

(a) Each city having a population of twenty thousand or more shall establish a disability board having jurisdiction over all members employed by the cities and composed of the following five members: Two members of the city legislative body to be appointed by the mayor, one active or retired fire fighter to be elected by the fire fighters employed by or retired from the city, one active or retired law enforcement officer to be elected by the law enforcement officers employed by or retired from the city, and one member from the public at large who resides within the city to be appointed by the other four members designated in this subsection. Retired members who are subject to the jurisdiction of the board have both the right to elect and the right to be elected under this section. Each of the elected members shall serve a two-year term. The members appointed pursuant to this subsection shall serve for two-year terms: PROVIDED, That cities of the first class only, shall retain existing firemen's pension boards established pursuant to RCW 41.16.020 and existing boards of trustees of the relief and pension fund of the police department as established pursuant to RCW 41.20.010 which such boards shall have authority to act upon and approve or disapprove claims for disability by fire fighters or law enforcement officers as provided under this chapter. No disability boards shall be established under the authority of this subsection (1)(a) after December 31, 2001.

(b) Each county shall establish a disability board having jurisdiction over all members residing in the county and not employed by a city in which a disability board is established. The county disability board so created shall be composed of five members to be chosen as follows: One member of the legislative body of the county to be appointed by the county legislative body, one member of a city or town legislative body located within the county which does not contain a city disability board established pursuant to (a) of this subsection to be chosen by a majority of the mayors of such cities and towns within the county which does not contain a city disability board, one fire fighter or retired fire fighter to be elected by the fire fighters employed or retired in the county who are not employed by or retired from a city in which a disability board is established, one law enforcement officer or retired law enforcement officer to be elected by the law enforcement officers employed in or retired from the county who are not employed by or retired from a city in which a disability board is established, and one member from the public at large who resides within the county but does not reside within a city in which a city disability board is established, to be appointed by the other four members designated in this subsection. However, in counties with a population less than sixty thousand, the member of the disability board appointed by a majority of the mayors of the cities and towns within the county that do not contain a city disability board must be a resident of one of the cities and towns but need not be a member of a city or town legislative body. Retired members who are subject to the jurisdiction of the board have both the right to elect and the right to be elected under this section. All members appointed or elected pursuant to this subsection shall serve for two-year terms.

(2) The members of both the county and city disability boards shall not receive compensation for their service upon the boards but the members shall be reimbursed by their respective county or city for all expenses incidental to such service as to the amount authorized by law.

(3) The disability boards authorized for establishment by this section shall perform all functions, exercise all powers, and make all such determinations as specified in this chapter.

NEW SECTION. Sec. 219. DIRECTOR TO ADOPT RULES GOVERNING DISABILITY BOARDS. (1) The director shall adopt rules, in accordance with chapter 34.05 RCW, under which each disability board shall execute its disability retirement duties under this chapter. The rules shall include, but not be limited to, the following:

(a) Standards governing the type and manner of presentation of medical, employability, and other evidence before disability boards; and

(b) Standards governing the necessity and frequency of medical and employability reexaminations of persons receiving disability benefits.

(2) If the director determines that an order or determination of a disability board was not processed in accordance with the rules established under this section, the director may remand the order or determination for further proceedings consistent with the rules.

NEW SECTION. Sec. 220. RETIREMENT FOR DISABILITY INCURRED IN THE LINE OF DUTY. Any member, regardless of age or years of service, may be retired by the disability board, subject to approval by the director, for any disability incurred in the line of duty which has been continuous since his or her discontinuance of service and which renders the member unable to continue service. No disability retirement allowance shall be paid until the expiration of a period of six months after the discontinuance of service during which period the member, if found to be physically or mentally unfit for duty by the disability board following receipt of his or her application for disability retirement, shall be granted a disability leave by the disability board and shall receive an allowance equal to the full monthly salary and shall continue to receive all other benefits provided to active employees from the employer for such period. However, if, at any time during the initial six-month period, the disability board finds the beneficiary is no longer disabled, the disability leave allowance shall be canceled and the member shall be restored to duty in the same rank or position, if any, held by the beneficiary at the time the member became disabled. Applications for disability retirement shall be processed in accordance with the following procedures:

(1) Any member who believes he or she is or is believed to be physically or mentally disabled shall be examined by such medical authority as the disability board shall employ, upon application of the member, or a person acting in his or her behalf, stating that the member is disabled, either physically or mentally: PROVIDED, That no such application shall be considered unless the member or someone in his or her behalf, in case of the incapacity of a member, shall have filed the application within a period of one year from and after the discontinuance of service of the member.

(2) If the examination shows, to the satisfaction of the disability board, that the member is physically or mentally disabled from the further performance of duty, that such disability was incurred in the line of duty, and that such disability has been continuous from the discontinuance of service, the disability board shall enter its written decision and order, accompanied by appropriate findings of fact and by conclusions evidencing compliance with this chapter, granting the member a disability retirement allowance; otherwise, if the member is not found by the disability board to be so disabled, the application shall be denied pursuant to a similar written decision and order, subject to appeal to the director in accordance with section 235 of this act: PROVIDED, That in any order granting a duty disability retirement allowance, the disability board shall make a finding that the disability was incurred in line of duty.

(3) Every order of a disability board granting a duty disability retirement allowance shall immediately be reviewed by the director except the finding that the disability was incurred in the line of duty. The director may affirm the decision of the disability board or remand the case for further proceedings, or the director may reverse the decision of the disability board if the director finds the disability board's findings, inferences, conclusions, or decisions are:

(a) In violation of constitutional provisions;

(b) In excess of the statutory authority or jurisdiction of the disability board;

(d) Affected by other error of law;

(e) Clearly erroneous in view of the entire record as submitted and the public policy contained in this chapter; or

(f) Arbitrary or capricious.

(4) Every member who can establish, to the disability board, that he or she is physically or mentally disabled from the further performance of duty, that such disability was incurred in the line of duty, and that such disability will be in existence for a period of at least six months may waive the six-month period of disability leave and be immediately granted a duty disability retirement allowance, subject to the approval of the director as provided in subsection (3) of this section.

NEW SECTION. Sec. 221. RETIREMENT FOR DISABILITY NOT INCURRED IN THE LINE OF DUTY. Any member, regardless of age or years of service, may be retired by the disability board, subject to approval by the director as provided in this section, for any disability not incurred in the line of duty which has been continuous since discontinuance of service and which renders the member unable to continue service. No disability retirement allowance may be paid until the expiration of a period of six months after the discontinuance of service during which period the member, if found to be physically or mentally unfit for duty by the disability board following receipt of the member's application for disability retirement, shall be granted a disability leave by the disability board and shall receive an allowance equal to the member's full monthly salary and shall continue to receive all other benefits provided to active employees from the member's employer for the period. However, if, at any time during the initial six-month period, the disability board finds the beneficiary is no longer disabled, the disability leave allowance shall be canceled and the member shall be restored to duty in the same rank or position, if any, held by the member at the time the member became disabled. Applications for disability retirement shall be processed in accordance with the following procedures:

(1) Any member who believes he or she is, or is believed to be, physically or mentally disabled shall be examined by such medical authority as the disability board shall employ, upon application of the member, or a person acting in the member's behalf, stating that the member is disabled, either physically or mentally: PROVIDED, That no such application shall be considered unless the member or someone acting in the member's behalf, in case of the incapacity of a member, has filed the application within a period of one year from and after the discontinuance of service of the member.

(2) If the examination shows, to the satisfaction of the disability board, that the member is physically or mentally disabled from the further performance of duty, that such disability was not incurred in the line of duty, and that such disability had been continuous from the discontinuance of service, the disability board shall enter its written decision and order, accompanied by appropriate findings of fact and by conclusions evidencing compliance with this chapter, granting the member a disability retirement allowance. Otherwise, if the member is not found by the disability board to be so disabled, the application shall be denied pursuant to a similar written decision and order, subject to appeal to the director in accordance with section 235 of this act: PROVIDED, That in any order granting a nonduty disability retirement allowance, the disability board shall make a finding that the disability was not incurred in the line of duty.

(3) Every order of a disability board granting a nonduty disability retirement allowance shall immediately be reviewed by the director except the finding that the disability was not incurred in the line of duty. The director may affirm the decision of the disability board or remand the case for further proceedings, or the director may reverse the decision of the disability board if the director finds the disability board's findings, inferences, conclusions, or decisions are:

(a) In violation of constitutional provisions;

(b) In excess of the statutory authority or jurisdiction of the disability board;

(d) Affected by other error of law;

(e) Clearly erroneous in view of the entire record as submitted and the public policy contained in this chapter; or

(f) Arbitrary or capricious.

(4) Every member who can establish to the disability board that the member is physically or mentally disabled from the further performance of duty, that such disability was not incurred in the line of duty, and that such disability will be in existence for a period of at least six months, may waive the six-month period of disability leave and be immediately granted a nonduty disability retirement allowance, subject to the approval of the director as provided in subsection (3) of this section.

NEW SECTION. Sec. 222. ALLOWANCE ON RETIREMENT FOR DISABILITY. (1) Upon retirement for disability a member shall be entitled to receive a monthly retirement allowance computed as follows: (a) A basic amount of fifty percent of final average salary at time of disability retirement, and (b) an additional five percent of final average salary for each child as defined in section 202(7) of this act, (c) the combined total of (a) and (b) of this subsection shall not exceed a maximum of sixty percent of final average salary.

(2) A disabled member shall begin receiving the disability retirement allowance as of the expiration of his or her six-month period of disability leave or, if his or her application was filed after the sixth month of discontinuance of service but prior to the one-year time limit, the member's disability retirement allowance shall be retroactive to the end of the sixth month.

(3) Benefits under this section will be payable until the member recovers from the disability or dies. If at the time that the disability ceases the member is over the age of fifty, he or she shall then receive either disability retirement allowance or retirement for service allowance, whichever is greater.

(4) Benefits under this section for a disability that is incurred while in other employment will be reduced by any amount the member receives or is entitled to receive from workers' compensation, social security, group insurance, other pension plan, or any other similar source provided by another employer on account of the same disability.

(5) A member retired for disability shall be subject to periodic examinations by a physician approved by the disability board prior to attainment of age fifty, pursuant to rules adopted by the director under section 219 of this act. Examinations of members who retired for disability prior to July 26, 1981, shall not exceed two medical examinations per year.

NEW SECTION. Sec. 223. CESSATION OF DISABILITY‑-DETERMINATION. (1) A disabled member who believes that his or her disability has ceased in accordance with section 222(3) of this act may make application to the disability board which originally found the member to be disabled, for a determination that the disability has ceased.

(2) Every order of a disability board determining that a member's disability has ceased pursuant to section 222(3) of this act shall immediately be reviewed by the director. The director may affirm the decision of the disability board or remand the case for further proceedings if the director finds the disability board's findings, inferences, conclusions, or decisions are:

(a) In violation of constitutional provisions;

(b) In excess of the statutory authority or jurisdiction of the disability board;

(d) Affected by other error of law;

(e) Clearly erroneous in view of the entire record as submitted and the public policy contained in this chapter; or

(f) Arbitrary or capricious.

(3) Determinations of whether a disability has ceased under section 222(3) of this act and this section shall be made in accordance with the same procedures and standards governing other cancellations of disability retirement.

NEW SECTION. Sec. 224. REEXAMINATIONS OF DISABILITY BENEFICIARIES‑-REENTRY‑-APPEAL. (1) Upon the basis of reexaminations of members on disability retirement as provided in section 222 of this act, the disability board shall determine whether such disability beneficiary is still unable to perform his or her duties either physically or mentally for service in the department where he or she was employed.

(2) If the disability board determines that the beneficiary is not so incapacitated the retirement allowance shall be canceled and the member shall be restored to duty in the same civil service rank, if any, held by the beneficiary at the time of his or her retirement or if unable to perform the duties of that rank, then, at his or her request, in such other like or lesser rank as may be or become open and available, the duties of which he or she is then able to perform. In no event, shall a beneficiary previously drawing a disability allowance be returned or be restored to duty at a salary or rate of pay less than the current salary attached to the rank or position held by the beneficiary at the date of retirement for disability. If the disability board determines that the beneficiary is able to return to service he or she shall be entitled to notice and a hearing, both the notice and the hearing shall comply with the requirements of chapter 34.05 RCW.

(3) Should a disability beneficiary reenter service and be eligible for membership in the retirement system, the retirement allowance shall be canceled and he or she shall immediately become a member of the retirement system.

(4) Should any disability beneficiary under age fifty refuse to submit to examination, the retirement allowance shall be discontinued until withdrawal of such refusal, and should such refusal continue for one year or more, the retirement allowance shall be canceled.

(5) Should the disability retirement allowance of any disability beneficiary be canceled for any cause other than reentrance into service or retirement for service, he or she shall be paid the excess, if any, of the accumulated contributions at the time of retirement over all payments made on his or her behalf under this chapter.

(6) Any person feeling aggrieved by an order of a disability board determining that a beneficiary's disability has not ceased, pursuant to section 222(3) of this act has the right to appeal the order or determination to the director. The director shall have no jurisdiction to entertain the appeal unless a notice of appeal is filed with the director within thirty days following the rendition of the order by the disability board. A copy of the notice of appeal shall be served upon the director and the applicable disability board and, within ninety days thereof, the disability board shall certify its decision and order which shall include findings of fact and conclusions of law, together with a transcript of all proceedings in connection therewith, to the director for review. Upon review of the record, the director may affirm the order of the disability board or may remand the case for further proceedings if the director finds that the disability board's findings, inferences, conclusions, or decisions are:

(a) In violation of constitutional provisions;

(b) In excess of the statutory authority or jurisdiction of the disability board;

(d) Affected by other error of law;

(e) Clearly erroneous in view of the entire record as submitted and the public policy contained in this chapter; or

(f) Arbitrary or capricious.

NEW SECTION. Sec. 225. SICKNESS OR DISABILITY BENEFITS‑-MEDICAL SERVICES. (1) Whenever any active member, or any member hereafter retired, on account of service, sickness, or disability, not caused or brought on by dissipation or abuse, of which the disability board shall be judge, is confined in any hospital or in home, and whether or not so confined, requires medical services, the employer shall pay for the active or retired member the necessary medical services not payable from some other source as provided for in subsection (2) of this section. In the case of active or retired fire fighters the employer may make the payments provided for in this section from the firemen's pension fund established pursuant to RCW 41.16.050 where the fund had been established prior to March 1, 1970. If this pension fund is depleted, the employer shall have the obligation to pay all benefits payable under chapters 41.16 and 41.18 RCW.

(a) The disability board in all cases may have the active or retired member suffering from such sickness or disability examined at any time by a licensed physician or physicians, to be appointed by the disability board, for the purpose of ascertaining the nature and extent of the sickness or disability, the physician or physicians to report to the disability board the result of the examination within three days thereafter. Any active or retired member who refuses to submit to such examination or examinations shall forfeit all rights to benefits under this section for the period of the refusal.

(b) The disability board shall designate the medical services available to any sick or disabled member.

(2) The medical services payable under this section will be reduced by any amount received or eligible to be received by the member under workers' compensation, social security including the changes incorporated under Public Law 89‑97, insurance provided by another employer, other pension plan, or any other similar source. Failure to apply for coverage if otherwise eligible under the provisions of Public Law 89‑97 shall not be deemed a refusal of payment of benefits thereby enabling collection of charges under the provisions of this chapter.

(3) Upon making the payments provided for in subsection (1) of this section, the employer shall be subrogated to all rights of the member against any third party who may be held liable for the member's injuries or for payment of the cost of medical services in connection with a member's sickness or disability to the extent necessary to recover the amount of payments made by the employer.

(4) Any employer under this chapter, either singly, or jointly with any other such employer or employers through an association thereof as provided for in chapter 48.21 RCW, may provide for all or part of one or more plans of group hospitalization and medical aid insurance to cover any of its employees who are members of the restated law enforcement officers' and fire fighters' retirement system, and/or retired former employees who were, before retirement, members of the retirement system, through contracts with regularly constituted insurance carriers, with health maintenance organizations as defined in chapter 48.46 RCW, or with health care service contractors as defined in chapter 48.44 RCW. Benefits payable under the plan or plans shall be deemed to be amounts received or eligible to be received by the active or retired member under subsection (2) of this section.

(5) Any employer, jointly with any other employer or employers of the state, may participate in the medical benefits risk pool established under chapter 41.--- RCW (sections 301 through 310 of this act).

(6) Any employer under this chapter may, at its discretion, elect to reimburse a retired former employee under this chapter for premiums the retired former employee has paid for medical insurance that supplements medicare, including premiums the retired former employee has paid for medicare part B coverage.

NEW SECTION. Sec. 226. DEATH BENEFITS‑‑DUTY CONNECTED. (1) In the event of the duty connected death of any member who is in active service, or who has vested under section 216 of this act with twenty or more service credit years of service, or who is on duty connected disability leave or retired for duty connected disability, the surviving spouse shall become entitled to receive a monthly allowance equal to fifty percent of the final average salary at the date of death if active, or the amount of retirement allowance the vested member would have received at age fifty, or the amount of the retirement allowance such retired member was receiving at the time of death if retired for duty connected disability. The amount of this allowance will be increased five percent of final average salary for each child as defined in section 202(7) of this act, subject to a maximum combined allowance of sixty percent of final average salary: PROVIDED, That if the child or children is or are in the care of a legal guardian, payment of the increase attributable to each child will be made to the child's legal guardian or, in the absence of a legal guardian and if the member has created a trust for the benefit of the child or children, payment of the increase attributable to each child will be made to the trust.

(2) If at the time of the duty connected death of a vested member with twenty or more service credit years of service as provided in subsection (1) of this section or a member retired for duty connected disability, the surviving spouse has not been lawfully married to such member for one year prior to retirement or separation from service if a vested member, the surviving spouse shall not be eligible to receive the benefits under this section: PROVIDED, That if a member dies as a result of a disability incurred in the line of duty, then if he or she was married at the time he or she was disabled, the surviving spouse shall be eligible to receive the benefits under this section.

(3) If there be no surviving spouse eligible to receive benefits at the time of such member's duty connected death, then the child or children of such member shall receive a monthly allowance equal to thirty percent of final average salary for one child and an additional ten percent for each additional child subject to a maximum combined payment, under this subsection, of sixty percent of final average salary. When there cease to be any eligible children as defined in section 202(7) of this act, there shall be paid to the legal heirs of the member the excess, if any, of accumulated contributions of the member at the time of death over all payments made to survivors on his or her behalf under this chapter: PROVIDED, That payments under this subsection to children shall be prorated equally among the children, if more than one. If the member has created a trust for the benefit of the child or children, the payment shall be made to the trust.

(4) In the event that there is no surviving spouse eligible to receive benefits under this section, and that there be no child or children eligible to receive benefits under this section, then the accumulated contributions shall be paid to the estate of the member.

(5) If a surviving spouse receiving benefits under the provisions of this section thereafter dies and there are children as defined in section 202(7) of this act, payment to the spouse shall cease and the child or children shall receive the benefits as provided in subsection (3) of this section.

(6) The payment provided by this section shall become due the day following the date of death and payments shall be retroactive to that date.

NEW SECTION. Sec. 227. DEATH BENEFITS‑-NONDUTY CONNECTED. (1) In the event of the nonduty connected death of any member who is in active service, or who has vested under section 216 of this act with twenty or more service credit years of service, or who is on disability leave or retired, whether for nonduty connected disability or service, the surviving spouse shall become entitled to receive a monthly allowance equal to fifty percent of the final average salary at the date of death if active, or the amount of retirement allowance the vested member would have received at age fifty, or the amount of the retirement allowance such retired member was receiving at the time of death if retired for service or nonduty connected disability. The amount of this allowance will be increased five percent of final average salary for each child as defined in section 202(7) of this act, subject to a maximum combined allowance of sixty percent of final average salary: PROVIDED, That if the child or children is or are in the care of a legal guardian, payment of the increase attributable to each child will be made to the child's legal guardian or, in the absence of a legal guardian and if the member has created a trust for the benefit of the child or children, payment of the increase attributable to each child will be made to the trust.

(2) If at the time of the death of a vested member with twenty or more service credit years of service as provided in subsection (1) of this section or a member retired for service or disability, the surviving spouse has not been lawfully married to such member for one year prior to retirement or separation from service if a vested member, the surviving spouse shall not be eligible to receive the benefits under this section.

(3) If there be no surviving spouse eligible to receive benefits at the time of such member's death, then the child or children of such member shall receive a monthly allowance equal to thirty percent of final average salary for one child and an additional ten percent for each additional child subject to a maximum combined payment, under this subsection, of sixty percent of final average salary. When there cease to be any eligible children as defined in section 202(7) of this act, there shall be paid to the legal heirs of the member the excess, if any, of accumulated contributions of the member at the time of death over all payments made to survivors on his or her behalf under this chapter: PROVIDED, That payments under this subsection to children shall be prorated equally among the children, if more than one. If the member has created a trust for the benefit of the child or children, the payment shall be made to the trust.

(6) The payment provided by this section shall become due the day following the date of death and payments shall be retroactive to that date.

NEW SECTION. Sec. 228. EX SPOUSE QUALIFYING AS SURVIVING SPOUSE‑-WHEN. (1) An ex spouse of a retiree shall qualify as surviving spouse under section 226 of this act if the ex spouse:

(a) Has been provided benefits under any currently effective court decree of dissolution or legal separation or in any court order or court-approved property settlement agreement incident to any court decree of dissolution or legal separation entered after the member's retirement and prior to December 31, 1979; and

(b) Was married to the retiree for at least thirty years, including at least twenty years prior to the member's retirement or separation from service if a vested member.

(2) If two or more persons are eligible for a surviving spouse benefit under this subsection, benefits shall be divided between the surviving spouses based on the percentage of total service credit the member accrued during each marriage.

(3) This section shall apply retroactively.

NEW SECTION. Sec. 229. REFUND OF CONTRIBUTIONS ON DISCONTINUANCE OF SERVICE‑-REENTRY. (1) Should service of a member be discontinued except by death, disability, or retirement, the member shall, upon application therefor, be paid the accumulated contributions within sixty days after the day of application and the rights to all benefits as a member shall cease: PROVIDED, That any member with at least five years' service may elect the provisions of section 216(2) of this act.

(2) Any member whose contributions have been paid in accordance with subsection (1) of this section and who reenters the service of an employer shall upon the restoration of withdrawn contributions, which restoration must be completed within a total period of five years of service following resumption of employment, then receive credit toward retirement for the period of previous service which these contributions are to cover.

(3) If the member fails to meet the time limitations of subsection (2) of this section, the member may make the payment required under RCW 41.50.165(2) prior to retirement. The member shall then receive credit toward retirement for the period of previous service that the withdrawn contributions cover.

NEW SECTION. Sec. 230. CREDIT FOR MILITARY SERVICE. Each person affected by this chapter who at the time of entering the armed services was a member of this system or plan 1 under chapter 41.26 RCW, and has honorably served in the armed services of the United States, shall have added to the period of service as computed under this chapter, the period of service in the armed forces: PROVIDED, That such credited service shall not exceed five years.

NEW SECTION. Sec. 231. CREDIT FOR SERVICE UNDER PRIOR PENSION SYSTEM‑-RESTORATION OF WITHDRAWN CONTRIBUTIONS. If a member of this retirement system served as a law enforcement officer or fire fighter under a prior pension system and that service is not creditable to this retirement system because the member withdrew his or her contributions plus accrued interest from the prior pension system, the member's prior service as a law enforcement officer shall be credited to this retirement system if the member pays to the retirement system the amount under RCW 41.50.165(2) prior to retirement.

NEW SECTION. Sec. 232. CREDIT FOR SERVICE UNDER PRIOR PENSION SYSTEM‑-SERVICE NOT COVERED UNDER PRIOR SYSTEM. If a member's prior service as a law enforcement officer or fire fighter under a prior pension system is not creditable because, although employed in a position covered by a prior pension act, the member had not yet become a member of the pension system governed by the act, the member's prior service as a law enforcement officer or fire fighter shall be creditable if the member pays to the plan the amount set forth under RCW 41.50.165(2) prior to retirement.

NEW SECTION. Sec. 233. TRANSFER OF SERVICE CREDIT FROM OTHER RETIREMENT SYSTEM‑-IRREVOCABLE ELECTION ALLOWED. Any member of the teachers' retirement system plans 1, 2, or 3, the public employees' retirement system plans 1 or 2, or the Washington state patrol retirement system who has previously established service credit in the restated law enforcement officers' and fire fighters' retirement system may make an irrevocable election to have such service transferred to their current retirement system and plan subject to the following conditions:

(1) If the individual is employed by an employer in an eligible position, as of July 1, 1997, the election to transfer service must be filed in writing with the department no later than July 1, 1998. If the individual is not employed by an employer in an eligible position, as of July 1, 1997, the election to transfer service must be filed in writing with the department no later than one year from the date they are employed by an employer in an eligible position.

(2) An individual transferring service under this section forfeits the rights to all benefits as a member of the restated law enforcement officers' and fire fighters' retirement system and will be permanently excluded from membership.

(3) Any individual choosing to transfer service under this section will have transferred to their current retirement system and plan: (a) All the individual's accumulated contributions; (b) an amount sufficient to ensure that the employer contribution rate in the individual's current system and plan will not increase due to the transfer; and (c) all applicable months of service, as defined in section 202(14) of this act.

(4) If an individual has withdrawn contributions from the law enforcement officers' and fire fighters' retirement system plan 1 or the plan established by this chapter, the individual may restore the contributions, together with interest as determined by the director, and recover the service represented by the contributions for the sole purpose of transferring service under this section. The contributions must be restored before the transfer can occur and the restoration must be completed within the time limitations specified in subsection (1) of this section.

(5) Any service transferred under this section does not apply to the eligibility requirements for military service credit as defined in RCW 41.40.170(3) or 43.43.260(3).

(6) If an individual does not meet the time limitations of subsection (1) of this section, the individual may elect to restore any withdrawn contributions and transfer service under this section by paying the amount required under subsection (3)(b) of this section less any employee contributions transferred.

NEW SECTION. Sec. 234. SERVICE CREDIT FOR PAID LEAVE OF ABSENCE--APPLICATION TO ELECTED OFFICIALS OF LABOR ORGANIZATIONS. (1) A member who is on a paid leave of absence authorized by a member's employer shall continue to receive service credit as provided under this chapter.

(2) A member who receives compensation from an employer while on an authorized leave of absence to serve as an elected official of a labor organization, and whose employer is reimbursed by the labor organization for the compensation paid to the member during the period of absence, may also be considered to be on a paid leave of absence. This subsection shall only apply if the member's leave of absence is authorized by a collective bargaining agreement that provides that the member retains seniority rights with the employer during the period of leave. The basic salary reported for a member who establishes service credit under this subsection may not be greater than the salary paid to the highest paid job class covered by the collective bargaining agreement.

NEW SECTION. Sec. 235. APPEAL TO DIRECTOR. Any person feeling aggrieved by any order or determination of a disability board denying disability leave or disability retirement, or canceling a previously granted disability retirement allowance, shall have the right to appeal the order or determination to the director. The director shall have no jurisdiction to entertain the appeal unless a notice of appeal is filed with the director within thirty days following the rendition of the order by the applicable disability board. A copy of the notice of appeal shall be served upon the director and the applicable disability board and, within ninety days thereof, the disability board shall certify its decision and order which shall include findings of fact and conclusions of law, together with a transcript of all proceedings in connection therewith, to the director for review. Upon review of the record, the director may affirm the order of the disability board or may remand the case for such further proceedings as he or she may direct, in accordance with such rules of procedure as the director shall adopt.

NEW SECTION. Sec. 236. NOTICE FOR HEARING REQUIRED PRIOR TO PETITIONING FOR JUDICIAL REVIEW. Any person aggrieved by any final decision of the director must, before petitioning for judicial review, file with the director by mail or personally within sixty days from the day the decision was communicated to the person, a notice for a hearing. The notice of hearing shall set forth in full detail the grounds upon which such person considers such decision unjust or unlawful and shall include every issue to be considered, and it must contain a detailed statement of facts upon which such person relies in support thereof. Such persons shall be deemed to have waived all objections or irregularities concerning the matter on which such appeal is taken other than those specifically set forth in the notice of hearing or appearing in the records of the retirement system.

NEW SECTION. Sec. 237. HEARING‑-CONDUCT. A hearing shall be held by the director, or the director's duly authorized representative, in the county of the residence of the claimant at a time and place designated by the director. Such hearing shall be de novo and shall conform to the provisions of chapter 34.05 RCW. The disability board and the department shall be entitled to appear in all such proceedings and introduce testimony in support of the decision. Judicial review of any final decision by the director shall be governed by the provisions of chapter 34.05 RCW.

NEW SECTION. Sec. 238. INCREASES OR DECREASES IN RETIREMENT ALLOWANCES TO BE DETERMINED BY DEPARTMENT IN ACCORDANCE WITH CONSUMER PRICE INDEX. For purposes of this section:

(1) "Index" means, for any calendar year, that year's average consumer price index for the Seattle, Washington area for urban wage earners and clerical workers, all items (1957‑1959=100), compiled by the bureau of labor statistics of the United States department of labor;

(2) "Retirement allowance" means the retirement allowance provided for in sections 217 and 222 of this act, and the monthly allowance provided for in section 226 of this act.

On April 1st of each year, every retirement allowance which has been in effect for more than one year shall be adjusted to that dollar amount which exceeds its original dollar amount by the percentage difference which the department finds to exist between the index for the previous calendar year and the index for the calendar year prior to the effective retirement date of the person to whom, or on behalf of whom, such retirement allowance is being paid.

For the purposes of this section, "basic allowance" means that portion of a total retirement allowance, and any cost-of-living adjustment thereon, attributable to a member (individually) and shall not include the increased amounts attributable to the existence of a child or children. In those cases where a child ceases to be qualified as an eligible child, so as to lessen the total allowance, the allowance shall, at that time, be reduced to the basic allowance plus the amount attributable for the appropriate number of eligible children. In those cases where a child qualifies as an eligible child subsequent to the retirement of a member so as to increase the total allowance payable, such increased allowance shall at the time of the next and appropriate subsequent cost-of-living adjustments, be considered the original dollar amount of the allowance.

NEW SECTION. Sec. 239. INCREASE IN PRESENTLY PAYABLE BENEFITS FOR SERVICE OR DISABILITY AUTHORIZED. All benefits presently payable pursuant to the provisions of RCW 41.20.050, 41.20.060, and 41.20.080 as such RCW sections existed prior to the effective date of the amendment of such RCW sections by sections 1, 2, 3, chapter 191, Laws of 1961 to persons who retired prior to the effective date of the 1961 amendatory act, shall be increased annually as provided in this section. The local pension board shall meet subsequent to March 31st but prior to June 30th of each year for the purpose of adjusting benefit allowances payable pursuant to RCW 41.20.050, 41.20.060, and 41.20.080. The local board shall determine the increase in the consumer price index between January 1st and December 31st of the previous year and increase in dollar amount the benefits payable subsequent to July 1st of the year in which the board makes such determination by a dollar amount proportionate to the increase in the consumer price index: PROVIDED, That regardless of the change in the consumer price index, such increase shall be at least two percent each year such adjustment is made.

Each year effective with the July payment all benefits specified in this section, shall be increased as authorized by this section. This benefit increase shall be paid monthly as part of the regular pension payment and shall be cumulative.

For the purpose of this section, "consumer price index" means, for any calendar year, the consumer price index for the Seattle, Washington area as compiled by the bureau of labor statistics of the United States department of labor.

NEW SECTION. Sec. 240. INCREASE IN CERTAIN PRESENTLY PAYABLE DEATH BENEFITS AUTHORIZED. All benefits presently payable pursuant to the provisions of RCW 41.20.085 which are not related to the amount of current salary attached to the position held by the deceased member shall be increased annually in the same manner and to the same extent as provided for pursuant to section 239 of this act.

NEW SECTION. Sec. 241. DECLARATION OF POLICY RESPECTING BENEFITS FOR INJURY OR DEATH‑-CIVIL ACTIONS ABOLISHED. The legislature of the state of Washington hereby declares that the relationship between members of the restated law enforcement officers' and fire fighters' retirement system and their governmental employers is similar to that of workers to their employers and that the sure and certain relief granted by this chapter is desirable, and as beneficial to such law enforcement officers and fire fighters as workers' compensation coverage is to persons covered by Title 51 RCW. The legislature further declares that removal of law enforcement officers and fire fighters from workers' compensation coverage under Title 51 RCW necessitates the (1) continuance of sure and certain relief for personal injuries incurred in the course of employment or occupational disease, which the legislature finds to be accomplished by the provisions of this chapter and (2) protection for the governmental employer from actions at law; and to this end the legislature further declares that the benefits and remedies conferred by this chapter upon law enforcement officers and fire fighters covered under this chapter shall be to the exclusion of any other remedy, proceeding, or compensation for personal injuries or sickness, caused by the governmental employer except as otherwise provided by this chapter; and to that end all civil actions and civil causes of actions by such law enforcement officers and fire fighters against their governmental employers for personal injuries or sickness are hereby abolished, except as otherwise provided in this chapter.

NEW SECTION. Sec. 242. CAUSE OF ACTION FOR INJURY OR DEATH, WHEN. If injury or death results to a member from the intentional or negligent act or omission of a member's governmental employer, the member, the widow, widower, child, or dependent of the member shall have the privilege to benefit under this chapter and also have cause of action against the governmental employer as otherwise provided by law, for any excess of damages over the amount received or receivable under this chapter.

NEW SECTION. Sec. 243. Sections 1 through 10 and 201 through 242 of this act constitute a new chapter in Title 41 RCW, to be designated chapter 41.26A RCW.

PART III

LEOFF MEDICAL BENEFITS RISK POOL

NEW SECTION. Sec. 301. The purpose of this chapter is to establish a risk assumption program whereby employers of active and retired members of the restated law enforcement officers' and fire fighters' retirement system under chapter 41.26A RCW voluntarily enter into membership in a risk pool for the purpose of sharing the noninsured medical costs of long-term care and major medical services for retired members of the retirement system. Such long-term care and major medical services are those required under chapter 41.26A RCW and approved by city and county disability boards.

NEW SECTION. Sec. 302. The definitions in this section apply to this chapter unless the context clearly requires otherwise.

(1) "Actuary" means the state actuary, office of the state actuary.

(2) "Beneficiary" means any person in receipt of a retirement allowance or disability allowance who is eligible for medical services under the restated law enforcement officers' and fire fighters' retirement system under chapter 41.26A RCW.

(3) "Employer" means the legislative authority of any city, town, county, or district or the elected officials of any municipal corporation that employs any member of the restated law enforcement officers' and fire fighters' retirement system, or any authorized association of such municipalities.

(4) "Executive board" means the law enforcement officers' and fire fighters' risk pool executive board.

(5) "Long-term care" means those medically necessary services required under section 202(22) of this act, authorized under section 225 of this act, and received in a facility for skilled nursing care, intermediate care, custodial care, hospice care, day care, in-home nursing care, or other in-home care or services. For purposes of expenditures from the medical account, long-term care only includes qualified long-term care services as defined in internal revenue code section 7702B(2), and qualified long-term care insurance contract as defined in internal revenue code section 7702B(b).

(6) "Medical costs" means those costs incurred in the provision of the medically necessary medical services required under section 202(22) of this act and authorized under section 225 of this act. For purposes of expenditures from the medical account, medical costs only include cost of medical care as defined in internal revenue code section 213(d).

(7) "Risk assumption" means a decision to absorb the entity's financial exposure to a risk of loss without the creation of a formal program of advance funding of anticipated losses.

(8) "Risk pool" means the long-term care and medical costs risk pool created for the law enforcement officers' and fire fighters' medical benefits risk pool.

(9) "State risk manager" means the risk manager, risk management division, department of general administration.

NEW SECTION. Sec. 303. (1) There is hereby established the law enforcement officers' and fire fighters' medical benefits risk pool.

(2) The risk pool is a risk assumption insurance program for the sole purpose of employers sharing the noninsured medical costs of long-term care and medical costs for beneficiaries.

(3) An employer's participation and withdrawal from the risk pool is subject to rules established by the executive board.

NEW SECTION. Sec. 304. (1) The law enforcement officers' and fire fighters' risk pool executive board is hereby established.

(2)(a) The membership of the executive board shall consist of seven persons as follows:

(i) The chair is appointed by the governor for a four-year term of office. The chair shall be familiar with risk pool operation, medical, and long-term care matters but shall not have been employed as a law enforcement officer or fire fighter or served on a law enforcement officers' and fire fighters' disability board; and

(ii) Six others selected by the governor from lists of recommended persons made by their respective organizations as follows:

(A) Two persons representing counties, one of which is an elected official;

(B) Two persons representing cities and towns, one of which is an elected official; and

(b) If a member vacates his or her position, the governor shall select a person from a list recommended by his or her respective organization to replace the vacating member for the remainder of the term of office for the vacated position.

(3) One position of the county, city, or town, and fire protection district groups has an initial term of two years and four years thereafter. The remaining positions have terms of four years.

(4) A vice-chair shall be elected at the first meeting of the executive board and every two years thereafter. Upon the absence of the chair, the vice-chair shall act in his or her place.

(5) The executive board shall meet at least quarterly and shall maintain minutes of each meeting and any records as may be necessary, which are public records.

(6) The chair and three other members constitute a quorum.

(7) The members of the executive board shall not receive compensation for their service upon the executive board but shall be reimbursed for all expenses incidental to such service as to the amount authorized by either RCW 42.24.090 or 43.03.050 and 43.03.060, whichever is applicable.

NEW SECTION. Sec. 305. The duties of the executive board are as follows:

(1) Establish the basis of membership in the risk pool;

(2) Define and establish the benefits to be reimbursed by the risk pool;

(3) Authorize distribution of moneys from the risk pool account;

(4) Determine, with the assistance of the actuary, employer premiums to the risk pool;

(5) Authorize reimbursement for medical and long-term care costs, required under section 202(22) of this act and authorized under section 225 of this act that are not covered by standard medical insurance policies. The board shall adopt rules governing these reimbursements consistent with the provisions of the internal revenue code and rules and regulations established by the internal revenue service;

(6) Purchase reinsurance as necessary;

(7) Appoint other staff as necessary for the operation of the risk pool; fix their compensation within the limits provided by law; and prescribe their duties; and

(8) Enter into contracts necessary for the operation of the risk pool, including risk management, claims, and administrative services.

NEW SECTION. Sec. 306. Funding for the risk pool account, established in section 310 of this act, may come from three sources: (1) Employer premiums; (2) surplus assets which are transferred from the Washington law enforcement officers' and fire fighters' system plan 1 retirement fund under section 8 of this act; and (3) investment earnings.

NEW SECTION. Sec. 307. The state risk manager shall adopt rules governing the implementation, management, and operation of the risk pool in consultation with the health and welfare advisory board under RCW 48.62.051. All rules shall be appropriate for the type of program and class of risk covered. The state risk manager's rules shall include:

(1) Standards for the implementation, management, operation, and solvency of the risk pool, including the necessity and frequency of actuarial analyses and claims audits;

(2) Standards for claims management procedures;

(3) Standards for contracts between the risk pool and private businesses including standards for contracts between third-party administrators and the risk pool; and

(4) Standards for an annual report with the state risk manager and state auditor including, but not limited to:

(a) Copies of all the insurance coverage documents;

(b) A description of the program structure;

(d) A list of contractors and service providers;

(e) The financial and loss experience of the program; and

(f) Such other information as required by rule of the state risk manager.

NEW SECTION. Sec. 308. The risk pool may not engage in an act or practice that in any respect significantly differs from the management and operation plan that formed the basis for the state risk manager's approval unless the risk pool first notifies the state risk manager in writing and obtains the state risk manager's approval. The state risk manager shall approve or disapprove the proposed change within sixty days of receipt of the notice. If the state risk manager denies a requested change, the risk manager shall specify in detail the reasons for denial and the manner in which the risk pool would fail to meet the requirements of this chapter or any rules adopted in accordance with this chapter.

NEW SECTION. Sec. 309. (1) The state risk manager shall establish and charge an investigation fee in an amount necessary to cover the costs for the initial review and approval of the risk pool. The fee must accompany the initial submission of the plan of operation and management.

(2) The costs of subsequent reviews and investigations shall be charged to the risk pool being reviewed or investigated in accordance with the actual time and expenses incurred in the review or investigation.

(3) The risk pool shall pay any required fee or assessment required by the health and welfare advisory board under RCW 48.62.051.

NEW SECTION. Sec. 310. (1) The law enforcement officers' and fire fighters' medical benefits risk pool account is hereby established in the custody of the state treasurer. The account shall be invested by the Washington state investment board pursuant to section 7 of this act.

(2) The account shall consist of such money as is directed by law for deposit in the account, and such other money not subject to appropriation that the law enforcement officers' and fire fighters' risk pool executive board authorizes to be deposited in the account. Any money deposited in the account, the use of which has been restricted by law, may only be expended in accordance with those restrictions.

(3) Only the executive board or the board's designee may make disbursements from the account.

NEW SECTION. Sec. 311. Sections 301 through 310 of this act constitute a new chapter in Title 41 RCW.

Sec. 312. RCW 44.44.040 and 1987 c 25 s 3 are each amended to read as follows:

The office of the state actuary shall have the following powers and duties:

(1) Perform all actuarial services for the department of retirement systems, including all studies required by law, the state board for volunteer fire fighters and reserve officers, and the law enforcement officers' and fire fighters' risk pool executive board. Reimbursement for such services shall be made to the state actuary pursuant to the provisions of RCW 39.34.130 as now or hereafter amended.

(2) Advise the legislature and the governor regarding pension benefit provisions, and funding policies and investment policies of the state investment board.

(3) Consult with the legislature and the governor concerning determination of actuarial assumptions used by the department of retirement systems.

(4) Prepare a report, to be known as the actuarial fiscal note, on each pension bill introduced in the legislature which briefly explains the financial impact of the bill. The actuarial fiscal note shall include: (a) The statutorily required contribution for the biennium and the following twenty-five years; (b) the biennial cost of the increased benefits if these exceed the required contribution; and (c) any change in the present value of the unfunded accrued benefits. An actuarial fiscal note shall also be prepared for all amendments which are offered in committee or on the floor of the house of representatives or the senate to any pension bill. However, a majority of the members present may suspend the requirement for an actuarial fiscal note for amendments offered on the floor of the house of representatives or the senate.

(5) Provide such actuarial services to the legislature as may be requested from time to time.

(6) Provide staff and assistance to the committee established under ((~~RCW 46.44.050~~)) RCW 44.44.050.

(7) Provide assistance as required under section 305 of this act.

Sec. 313. RCW 48.62.031 and 1991 sp.s. c 30 s 3 are each amended to read as follows:

(1) The governing body of a local government entity may individually self-insure, may join or form a self-insurance program together with other entities, and may jointly purchase insurance or reinsurance with other entities for property and liability risks, and health and welfare benefits only as permitted under this chapter. In addition, the entity or entities may contract for or hire personnel to provide risk management, claims, and administrative services in accordance with this chapter.

(2) The governing body of a local government entity individually may join or form a risk assumption program together with other entities, and may jointly purchase insurance or reinsurance with other entities for health and welfare benefits. In addition, the entity or entities may contract for or hire personnel to provide risk management, claims, and administrative services in accordance with this chapter.

(3) The agreement to form a joint self-insurance or risk assumption program shall be made under chapter 39.34 RCW.

((~~(3)~~)) (4) Every individual and joint self-insurance program and a health and welfare risk assumption program is subject to audit by the state auditor.

((~~(4)~~)) (5) If provided for in the agreement or contract established under chapter 39.34 RCW, a joint self-insurance or risk assumption program may, in conformance with this chapter:

(a) Contract or otherwise provide for risk management and loss control services;

(b) Contract or otherwise provide legal counsel for the defense of claims and other legal services;

(d) Jointly purchase insurance and reinsurance coverage in such form and amount as the program's participants agree by contract; and

(e) Possess any other powers and perform all other functions reasonably necessary to carry out the purposes of this chapter.

((~~(5)~~)) (6) A local government entity or a health and welfare risk assumption program that has decided to assume a risk of loss must have available for inspection by the state auditor a written report indicating the class of risk or risks the governing body of the entity has decided to assume.

((~~(6)~~)) (7) Every joint self-insurance or risk assumption program governed by this chapter shall appoint the risk manager as its attorney to receive service of, and upon whom shall be served, all legal process issued against it in this state upon causes of action arising in this state.

(a) Service upon the risk manager as attorney shall constitute service upon the program. Service upon joint insurance programs subject to chapter 30, Laws of 1991 1st sp. sess. can be had only by service upon the risk manager. At the time of service, the plaintiff shall pay to the risk manager a fee to be set by the risk manager, taxable as costs in the action.

(b) With the initial filing for approval with the risk manager, each joint self-insurance program shall designate by name and address the person to whom the risk manager shall forward legal process so served upon him or her. The joint self-insurance program may change such person by filing a new designation.

(c) The appointment of the risk manager as attorney shall be irrevocable, shall bind any successor in interest or to the assets or liabilities of the joint self-insurance program, and shall remain in effect as long as there is in force in this state any contract made by the joint self-insurance program or liabilities or duties arising therefrom.

(d) The risk manager shall keep a record of the day and hour of service upon him or her of all legal process. A copy of the process, by registered mail with return receipt requested, shall be sent by the risk manager, to the person designated for the purpose by the joint self-insurance or risk assumption program in its most recent such designation filed with the risk manager. No proceedings shall be had against the joint self-insurance or risk assumption program, and the program shall not be required to appear, plead, or answer, until the expiration of forty days after the date of service upon the risk manager.

Sec. 314. RCW 48.62.051 and 1991 sp.s. c 30 s 5 are each amended to read as follows:

(1) The health and welfare advisory board is created consisting of the insurance commissioner and the state risk manager, or their designees, as ex officio members and six members appointed by the governor on the basis of their experience and knowledge pertaining to local government self-insured health and welfare benefits programs. The board shall include one city management representative; one county management representative; two management representatives from local government self-insured health and welfare programs; and two representatives of statewide employee organizations representing local government employees.

(2) The board shall assist the state risk manager in:

(a) Adopting rules governing the operation and management of both individual and joint self-insured health and welfare benefits programs and the law enforcement officers' and fire fighters' medical benefits risk pool;

(b) Reviewing and approving the creation of both individual and joint self-insured health and welfare benefits programs;

(c) Reviewing annual reports filed by health and welfare benefits programs and in recommending that corrective action be taken by the programs when necessary; and

(d) Responding to concerns of the state auditor related to the management and operation of health and welfare benefits programs.

(3) The board shall annually elect a chair and a vice-chair from its members. The board shall meet at least quarterly at such times as the state risk manager may fix. The board members who are appointed shall serve without compensation from the state but shall suffer no loss because of absence from their regular employment. Members of the board who are not public employees shall be compensated in accordance with RCW 43.03.240.

(4) A majority of the board constitutes a quorum for the transaction of business.

(5) The board shall keep public records of its proceedings.

PART IV

MISCELLANEOUS AMENDATORY SECTIONS

Sec. 401. RCW 2.10.155 and 1990 c 274 s 14 are each amended to read as follows:

(1) No judge shall be eligible to receive the judge's monthly service or disability retirement allowance if the retired judge is employed:

(a) For more than eight hundred ten hours in a calendar year as a pro tempore judge; or

(b) In an eligible position as defined in RCW 41.40.010 or 41.32.010, or as a law enforcement officer or fire fighter as defined in RCW 41.26.030 or section 202 of this act.

(2) Subsection (1) of this section notwithstanding, a previously elected judge of the superior court who retired before June 7, 1990, leaving a pending case in which the judge had made discretionary rulings may hear the pending case as a judge pro tempore without having his or her retirement allowance suspended.

(3) If a retired judge's benefits have been suspended under this section, his or her benefits shall be reinstated when the retiree terminates the employment that caused his or her benefits to be suspended. Upon reinstatement, the retired judge's benefits shall be actuarially recomputed pursuant to the rules adopted by the department.

(4) The department shall adopt rules implementing this section.

Sec. 402. RCW 6.15.020 and 1999 c 81 s 1 and 1999 c 42 s 603 are each reenacted and amended to read as follows:

(1) It is the policy of the state of Washington to ensure the well-being of its citizens by protecting retirement income to which they are or may become entitled. For that purpose generally and pursuant to the authority granted to the state of Washington under 11 U.S.C. Sec. 522(b)(2), the exemptions in this section relating to retirement benefits are provided.

(2) Unless otherwise provided by federal law, any money received by any citizen of the state of Washington as a pension from the government of the United States, whether the same be in the actual possession of such person or be deposited or loaned, shall be exempt from execution, attachment, garnishment, or seizure by or under any legal process whatever, and when a debtor dies, or absconds, and leaves his or her family any money exempted by this subsection, the same shall be exempt to the family as provided in this subsection. This subsection shall not apply to child support collection actions issued under chapter 26.18, 26.23, or 74.20A RCW, if otherwise permitted by federal law.

(3) The right of a person to a pension, annuity, or retirement allowance or disability allowance, or death benefits, or any optional benefit, or any other right accrued or accruing to any citizen of the state of Washington under any employee benefit plan, and any fund created by such a plan or arrangement, shall be exempt from execution, attachment, garnishment, or seizure by or under any legal process whatever. This subsection shall not apply to child support collection actions issued under chapter 26.18, 26.23, or 74.20A RCW if otherwise permitted by federal law. This subsection shall permit benefits under any such plan or arrangement to be payable to a spouse, former spouse, child, or other dependent of a participant in such plan to the extent expressly provided for in a qualified domestic relations order that meets the requirements for such orders under the plan, or, in the case of benefits payable under a plan described in sections 403(b) or 408 of the internal revenue code of 1986, as amended, or section 409 of such code as in effect before January 1, 1984, to the extent provided in any order issued by a court of competent jurisdiction that provides for maintenance or support. This subsection shall not prohibit actions against an employee benefit plan, or fund for valid obligations incurred by the plan or fund for the benefit of the plan or fund.

(4) For the purposes of this section, the term "employee benefit plan" means any plan or arrangement that is described in RCW 49.64.020, including any Keogh plan, whether funded by a trust or by an annuity contract, and in sections 401(a) or 403(a) of the internal revenue code of 1986, as amended; or that is a tax-sheltered annuity described in section 403(b) of such code or an individual retirement account described in section 408 of such code; or a Roth individual retirement account described in section 408A of such code; or a medical savings account described in section 220 of such code; or an education individual retirement account described in section 530 of such code; or a retirement bond described in section 409 of such code as in effect before January 1, 1984. The term "employee benefit plan" also means any rights accruing on account of money paid currently or in advance for purchase of tuition units under the advanced college tuition payment program in chapter 28B.95 RCW. The term "employee benefit plan" shall not include any employee benefit plan that is established or maintained for its employees by the government of the United States, by the state of Washington under chapter 2.10, 2.12, 41.26, 41.26A, 41.32, 41.34, 41.35, 41.40 or 43.43 RCW or RCW 41.50.770, or by any agency or instrumentality of the government of the United States.

(5) An employee benefit plan shall be deemed to be a spendthrift trust, regardless of the source of funds, the relationship between the trustee or custodian of the plan and the beneficiary, or the ability of the debtor to withdraw or borrow or otherwise become entitled to benefits from the plan before retirement. This subsection shall not apply to child support collection actions issued under chapter 26.18, 26.23, or 74.20A RCW, if otherwise permitted by federal law. This subsection shall permit benefits under any such plan or arrangement to be payable to a spouse, former spouse, child, or other dependent of a participant in such plan to the extent expressly provided for in a qualified domestic relations order that meets the requirements for such orders under the plan, or, in the case of benefits payable under a plan described in sections 403(b) or 408 of the internal revenue code of 1986, as amended, or section 409 of such code as in effect before January 1, 1984, to the extent provided in any order issued by a court of competent jurisdiction that provides for maintenance or support.

(6) Unless contrary to applicable federal law, nothing contained in subsection (3), (4), or (5) of this section shall be construed as a termination or limitation of a spouse's community property interest in an individual retirement account held in the name of or on account of the other spouse, the account holder spouse. At the death of the nonaccount holder spouse, the nonaccount holder spouse may transfer or distribute the community property interest of the nonaccount holder spouse in the account holder spouse's individual retirement account to the nonaccount holder spouse's estate, testamentary trust, inter vivos trust, or other successor or successors pursuant to the last will of the nonaccount holder spouse or the law of intestate succession, and that distributee may, but shall not be required to, obtain an order of a court of competent jurisdiction, including a nonjudicial dispute resolution agreement entered into pursuant to RCW 11.96.170 or other order entered under chapter 11.96A RCW, to confirm the distribution. For purposes of subsection (3) of this section, the distributee of the nonaccount holder spouse's community property interest in an individual retirement account shall be considered a person entitled to the full protection of subsection (3) of this section. The nonaccount holder spouse's consent to a beneficiary designation by the account holder spouse with respect to an individual retirement account shall not, absent clear and convincing evidence to the contrary, be deemed a release, gift, relinquishment, termination, limitation, or transfer of the nonaccount holder spouse's community property interest in an individual retirement account. For purposes of this subsection, the term "nonaccount holder spouse" means the spouse of the person in whose name the individual retirement account is maintained. The term "individual retirement account" includes an individual retirement account and an individual retirement annuity both as described in section 408 of the internal revenue code of 1986, as amended, a Roth individual retirement account as described in section 408A of the internal revenue code of 1986, as amended, and an individual retirement bond as described in section 409 of the internal revenue code as in effect before January 1, 1984. As used in this subsection, an order of a court of competent jurisdiction includes an agreement, as that term is used under RCW 11.96A.220.

Sec. 403. RCW 26.09.138 and 1991 c 365 s 24 are each amended to read as follows:

(1) Any obligee of a court order or decree establishing a spousal maintenance obligation may seek a mandatory benefits assignment order under chapter 41.50 RCW if any spousal maintenance payment is more than fifteen days past due and the total of such past due payments is equal to or greater than one hundred dollars, or if the obligor requests a withdrawal of accumulated contributions from the department of retirement systems.

(2) Any court order or decree establishing a spousal maintenance obligation may state that, if any spousal maintenance payment is more than fifteen days past due and the total of such past due payments is equal to or greater than one hundred dollars, or if the obligor requests a withdrawal of accumulated contributions from the department of retirement systems, the obligee may seek a mandatory benefits assignment order under chapter 41.50 RCW without prior notice to the obligor. Any such court order or decree may also, or in the alternative, contain a provision that would allow the department to make a direct payment of all or part of a withdrawal of accumulated contributions pursuant to RCW 41.50.550(3). Failure to include this provision does not affect the validity of the court order or decree establishing the spousal maintenance, nor does such failure affect the general applicability of RCW 41.50.500 through 41.50.650 to such obligations.

(3) The remedies in RCW 41.50.530 through 41.50.630 are the exclusive provisions of law enforceable against the department of retirement systems in connection with any action for enforcement of a spousal maintenance obligation ordered pursuant to a divorce, dissolution, or legal separation, and no other remedy ordered by a court under this chapter shall be enforceable against the department of retirement systems for collection of spousal maintenance.

(4)(a) Nothing in this section regarding mandatory assignment of benefits to enforce a spousal maintenance obligation shall abridge the right of an ex spouse to receive direct payment of retirement benefits payable pursuant to: (i) A court decree of dissolution or legal separation; or (ii) any court order or court-approved property settlement agreement; or (iii) incident to any court decree of dissolution or legal separation, if such dissolution orders fully comply with RCW 41.50.670 and 41.50.700, or as applicable, RCW 2.10.180, 2.12.090, 41.04.310, 41.04.320, 41.04.330, ((~~41.26.180~~)) 41.26.053, section 209 of this act, 41.32.052, 41.40.052, or 43.43.310 as those statutes existed before July 1, 1987, and as those statutes exist on and after July 28, 1991.

(b) Persons whose dissolution orders as defined in RCW 41.50.500(3) were entered between July 1, 1987, and July 28, 1991, shall be entitled to receive direct payments of retirement benefits to satisfy court-ordered property divisions if the dissolution orders filed with the department comply or are amended to comply with RCW 41.50.670 through 41.50.720 and, as applicable, RCW 2.10.180, 2.12.090, ((~~41.26.180~~)) 41.26.053, section 209 of this act, 41.32.052, 41.40.052, or 43.43.310.

Sec. 404. RCW 36.28A.010 and 1975 1st ex.s. c 172 s 1 are each amended to read as follows:

The Washington association of sheriffs and police chiefs is hereby declared to be a combination of units of local government: PROVIDED, That such association shall not be considered an "employer" within the meaning of RCW 41.26.030(2), section 202 of this act, or 41.40.010(4): PROVIDED FURTHER, That no compensation received as an employee of the association shall be considered salary for purposes of the provisions of any retirement system created pursuant to the general laws of this state: PROVIDED FURTHER, That such association shall not qualify for inclusion under the unallocated two mills of the property tax of any political subdivision: PROVIDED FURTHER, That the association shall not have the authority to assess any excess levy or bond measure.

Sec. 405. RCW 41.04.205 and 1995 1st sp.s. c 6 s 8 are each amended to read as follows:

(1) Notwithstanding the provisions of RCW 41.04.180, the employees, with their dependents, of any county, municipality, or other political subdivision of this state shall be eligible to participate in any insurance or self-insurance program for employees administered under chapter 41.05 RCW if the legislative authority of any such county, municipality, or other political subdivisions of this state determines, subject to collective bargaining under applicable statutes, a transfer to an insurance or self-insurance program administered under chapter 41.05 RCW should be made. In the event of a special district employee transfer pursuant to this section, members of the governing authority shall be eligible to be included in such transfer if such members are authorized by law as of June 25, 1976, to participate in the insurance program being transferred from and subject to payment by such members of all costs of insurance for members.

(2) When the legislative authority of a county, municipality, or other political subdivision determines to so transfer, the state health care authority shall:

(a) Establish the conditions for participation; and

(b) Have the sole right to reject the application.

Approval of the application by the state health care authority shall effect a transfer of the employees involved to the insurance, self-insurance, or health care program applied for.

(3) Any application of this section to members of the law enforcement officers' and fire fighters' retirement system under chapter 41.26 or 41.26A RCW is subject to chapter 41.56 RCW.

(4) School districts may voluntarily transfer, except that all eligible employees in a bargaining unit of a school district may transfer only as a unit and all nonrepresented employees in a district may transfer only as a unit.

Sec. 406. RCW 41.04.270 and 1988 c 195 s 5 are each amended to read as follows:

(1) Notwithstanding any provision of chapter 2.10, 2.12, 41.26, 41.26A, 41.28, 41.32, 41.40, or 43.43 RCW to the contrary, on and after March 19, 1976, any member or former member who (a) receives a retirement allowance earned by said former member as deferred compensation from any public retirement system authorized by the general laws of this state, or (b) is eligible to receive a retirement allowance from any public retirement system listed in RCW 41.50.030, but chooses not to apply, or (c) is the beneficiary of a disability allowance from any public retirement system listed in RCW 41.50.030 shall be estopped from becoming a member of or accruing any contractual rights whatsoever in any other public retirement system listed in RCW 41.50.030: PROVIDED, That (a) and (b) of this subsection shall not apply to persons who have accumulated less than fifteen years service credit in any such system.

(2) Nothing in this section is intended to apply to any retirement system except those listed in RCW 41.50.030 and the city employee retirement systems for Seattle, Tacoma, and Spokane. Subsection (1)(b) of this section does not apply to a dual member as defined in RCW 41.54.010.

Sec. 407. RCW 41.04.350 and 1979 ex.s. c 159 s 1 are each amended to read as follows:

(1) Notwithstanding any other provisions of law, no employee of the state of Washington or any of its political subdivisions or any institution supported in total or in part by the state or any of its political subdivisions, other than employees covered by chapters 41.26, 41.26A, and 43.43 RCW, shall be compelled to retire solely on the basis of age prior to attaining seventy years of age.

(2) All compulsory retirement provisions relating to public employees, other than employees covered by chapters 41.26, 41.26A, and 43.43 RCW, may be waived for individuals attaining seventy years of age by the individual's employer.

Sec. 408. RCW 41.04.400 and 1984 c 184 s 22 are each amended to read as follows:

It is the purpose of RCW 41.04.405 through 41.04.430 to govern the retirement rights of persons whose employment status is altered when: (1) Two or more units of local government of this state, at least one of which is a first class city with its own retirement system, enter into an agreement for the consolidated performance of a governmental service, activity, or undertaking; (2) the service, activity, or undertaking is to be performed either by one of the participating local governmental units or by a newly established separate legal entity; and (3) the employees of the participating local governmental units are not all members of the same Washington public retirement system.

RCW 41.04.405 through 41.04.430 are not intended to and do not govern retirement rights of any members of the retirement systems established by chapter 41.16, 41.18, 41.20, ((or)) 41.26, or 41.26A RCW, or of employees described in RCW 35.58.265, 35.58.390, or 70.08.070. To the extent there is any conflict between RCW 41.04.405 through 41.04.430 and RCW 41.04.110, the provisions of RCW 41.04.405 through 41.04.430 shall govern.

Sec. 409. RCW 41.05.320 and 1995 1st sp.s. c 6 s 13 are each amended to read as follows:

(1) Elected officials and all permanent employees of the state are eligible to participate in the benefits contribution plan and contribute amount(s) by agreement with the authority. The authority may adopt rules to permit participation in the plan by temporary employees of the state.

(2) Persons eligible under subsection (1) of this section may enter into benefits contribution agreements with the state.

(3)(a) In the initial year of the medical flexible spending arrangement or cafeteria plan, if authorized, an eligible person may become a participant after the adoption of the plan and before its effective date by agreeing to have a portion of his or her gross salary contributed and deposited into a health care and other benefits account to be used for reimbursement of expenses covered by the plan.

(b) After the initial year of the medical flexible spending arrangement or cafeteria plan, if authorized, an eligible person may become a participant for a full plan year, with annual benefit selection for each new plan year made before the beginning of the plan year, as determined by the authority, or upon becoming eligible.

(c) Once an eligible person elects to participate and the amount of gross salary that he or she shall contribute and the benefit for which the funds are to be used during the plan year is determined, the agreement shall be irrevocable and may not be amended during the plan year except as provided in (d) of this subsection. Prior to making an election to participate in the ((~~benefit[s]~~)) benefits contribution plan, the eligible person shall be informed in writing of all the benefits and contributions that will occur as a result of such election.

(d) The authority shall provide in the benefits contribution plan that a participant may enroll, terminate, or change his or her election after the plan year has begun if there is a significant change in a participant's status, as provided by 26 U.S.C. Sec. 125 and the regulations adopted under that section and defined by the authority.

(4) The authority shall establish as part of the benefits contribution plan the procedures for and effect of withdrawal from the plan by reason of retirement, death, leave of absence, or termination of employment. To the extent possible under federal law, the authority shall protect participants from forfeiture of rights under the plan.

(5) Any contribution under the benefits contribution plan shall continue to be included as reportable compensation for the purpose of computing the state retirement and pension benefits earned by the employee pursuant to chapters 41.26, 41.26A, 41.32, 41.40, and 43.43 RCW.

Sec. 410. RCW 41.18.210 and 1974 ex.s. c 148 s 1 are each amended to read as follows:

Any former employee of a department of a city of the first class, who (1) was a member of the employees' retirement system of such city, and (2) is now employed within the fire department of such city, may transfer his former membership credit from the city employees' retirement system to the fireman's pension system created by chapters 41.16 and 41.18 RCW by filing a written request with the board of administration and the municipal fireman's pension board, respectively.

Upon the receipt of such request, the transfer of membership to the city's fireman's pension system shall be made, together with a transfer of all accumulated contributions credited to such member. The board of administration shall transmit to the municipal fireman's pension board a record of service credited to such member which shall be computed and credited to such member as a part of his period of employment in the city's fireman's pension system. For the purpose of the transfer contemplated by this section, those affected individuals who have formerly withdrawn funds from the city employees' retirement system shall be allowed to restore contributions withdrawn from that retirement system directly to the fireman's pension system and receive credit in the fireman's pension system for their former membership service in the prior system.

Any employee so transferring shall have all the rights, benefits, and privileges that he would have been entitled to had he been a member of the city's fireman's pension system from the beginning of his employment with the city.

No person so transferring shall thereafter be entitled to any other public pension, except that provided by chapter 41.26 or 41.26A RCW or social security, which is based upon such service with the city.

The right of any employee to file a written request for transfer of membership as set forth in this section shall expire December 31, 1974.

Sec. 411. RCW 41.20.170 and 1973 c 143 s 2 are each amended to read as follows:

Any former employee of a department of a city of the first class who (1) was a member of the employees' retirement system of such city, and (2) is now employed within the police department of such city, may transfer his or her membership from the city employees' retirement system to the city's police relief and pension fund system by filing a written request with the board of administration and the board of trustees, respectively, of the two systems.

Upon the receipt of such request, the transfer of membership to the city's police relief and pension fund system shall be made, together with a transfer of all accumulated contributions credited to such member. The board of administration of the city's employees' retirement system shall transmit to the board of trustees of the city's police relief and pension fund system a record of service credited to such member which shall be computed and credited to such member as a part of his or her period of employment in the city's police relief and pension fund system. For the purpose of the transfer contemplated by this section, the affected individuals shall be allowed to restore withdrawn contributions to the city employees' retirement system and reinstate their membership service records.

Any employee so transferring shall have all the rights, benefits and privileges that he or she would have been entitled to had he or she been a member of the city's police relief and pension fund system from the beginning of his or her employment with the city.

No person so transferring shall thereafter be entitled to any other public pension, except that provided by chapter 41.26 or 41.26A RCW or social security, which is based upon service with the city.

The right of any employee to file a written request for transfer of membership as set forth herein shall expire December 31, 1973.

Sec. 412. RCW 41.20.175 and 1974 ex.s. c 148 s 2 are each amended to read as follows:

A former employee of a fire department of a city of the first class who (1) was a member of the fireman's pension system created by chapters 41.16 or 41.18 RCW, and (2) is now employed within the police department of such city, will be regarded as having received membership service credit for such service to the fire department in the city's police and relief pension system at the time he recovers such service credit by paying withdrawn contributions to the Washington law enforcement officers' and fire fighters' retirement system pursuant to RCW 41.26.030((~~(14)~~)) or section 202 of this act.

Sec. 413. RCW 41.24.400 and 1999 c 148 s 31 are each amended to read as follows:

(1) Except as provided in subsection (2) of this section, any municipality may make provision by appropriate legislation and payment of fees required by RCW 41.24.030(1) solely for the purpose of enabling any reserve officer to enroll under the retirement pension provisions of this chapter or fees required under RCW 41.24.030(1) to pay for the costs of extending the relief provisions of this chapter to its reserve officers.

(2) A reserve officer is not eligible to receive a benefit under the retirement provisions of this chapter for service under chapter 41.26, 41.26A, 41.32, or 41.40 RCW.

(3) Every municipality shall make provisions for the collection and payment of the fees required under this chapter, and shall continue to make provisions for all reserve officers who come under this chapter as long as they continue to be employed as reserve officers.

(4) Except as provided under RCW 41.24.450, a reserve officer is not eligible to receive a benefit under the relief provisions of this chapter.

Sec. 414. RCW 41.32.800 and 1998 c 341 s 605 are each amended to read as follows:

(1) Except as provided in RCW 41.32.802, no retiree under the provisions of plan 2 shall be eligible to receive such retiree's monthly retirement allowance if he or she is employed in an eligible position as defined in RCW 41.40.010, 41.32.010, or 41.35.010, or as a law enforcement officer or fire fighter as defined in RCW 41.26.030 or section 202 of this act.

If a retiree's benefits have been suspended under this section, his or her benefits shall be reinstated when the retiree terminates the employment that caused his or her benefits to be suspended. Upon reinstatement, the retiree's benefits shall be actuarially recomputed pursuant to the rules adopted by the department.

(2) The department shall adopt rules implementing this section.

Sec. 415. RCW 41.32.860 and 1997 c 254 s 7 are each amended to read as follows:

(1) Except under RCW 41.32.862, no retiree shall be eligible to receive such retiree's monthly retirement allowance if he or she is employed in an eligible position as defined in RCW 41.40.010 or 41.32.010, or as a law enforcement officer or fire fighter as defined in RCW 41.26.030 or section 202 of this act.

(2) If a retiree's benefits have been suspended under this section, his or her benefits shall be reinstated when the retiree terminates the employment that caused the suspension of benefits. Upon reinstatement, the retiree's benefits shall be actuarially recomputed pursuant to the rules adopted by the department.

Sec. 416. RCW 41.35.230 and 1998 c 341 s 24 are each amended to read as follows:

(1) Except as provided in RCW 41.35.060, no retiree under the provisions of plan 2 shall be eligible to receive such retiree's monthly retirement allowance if he or she is employed in an eligible position as defined in RCW 41.35.010, RCW 41.40.010 or 41.32.010, or as a law enforcement officer or fire fighter as defined in RCW 41.26.030 or section 202 of this act, except that a retiree who ends his or her membership in the retirement system pursuant to RCW 41.40.023(3)(b) is not subject to this section if the retiree's only employment is as an elective official.

(2) If a retiree's benefits have been suspended under this section, his or her benefits shall be reinstated when the retiree terminates the employment that caused his or her benefits to be suspended. Upon reinstatement, the retiree's benefits shall be actuarially recomputed pursuant to the rules adopted by the department.

(3) The department shall adopt rules implementing this section.

Sec. 417. RCW 41.40.690 and 1998 c 341 s 606 are each amended to read as follows:

(1) Except as provided in RCW 41.40.037, no retiree under the provisions of plan 2 shall be eligible to receive such retiree's monthly retirement allowance if he or she is employed in an eligible position as defined in RCW 41.40.010, 41.32.010, or 41.35.010, or as a law enforcement officer or fire fighter as defined in RCW 41.26.030 or section 202 of this act, except that a retiree who ends his or her membership in the retirement system pursuant to RCW 41.40.023(3)(b) is not subject to this section if the retiree's only employment is as an elective official of a city or town.

(3) The department shall adopt rules implementing this section.

Sec. 418. RCW 41.40.850 and 2000 c 247 s 315 are each amended to read as follows:

(1) Except as provided in RCW 41.40.037, no retiree under the provisions of plan 3 shall be eligible to receive such retiree's monthly retirement allowance if he or she is employed in an eligible position as defined in RCW 41.40.010, 41.32.010, or 41.35.010, or as a law enforcement officer or fire fighter as defined in RCW 41.26.030 or section 202 of this act, except that a retiree who ends his or her membership in the retirement system pursuant to RCW 41.40.023(3)(b) is not subject to this section if the retiree's only employment is as an elective official of a city or town.

(3) The department shall adopt rules implementing this section.

Sec. 419. RCW 41.45.010 and 1998 c 341 s 401 are each amended to read as follows:

It is the intent of the legislature to provide a dependable and systematic process for funding the benefits provided to members and retirees of the public employees' retirement system, chapter 41.40 RCW; the teachers' retirement system, chapter 41.32 RCW; the law enforcement officers' and fire fighters' retirement systems, chapter 41.26 and 41.26A RCW; the school employees' retirement system, chapter 41.35 RCW; and the Washington state patrol retirement system, chapter 43.43 RCW.

The funding processes established by this chapter ((is)) are intended to achieve the following goals:

(1) To continue to fully fund the public employees' retirement system plan 2, the teachers' retirement system plans 2 and 3, the school employees' retirement system plans 2 and 3, and the law enforcement officers' and fire fighters' retirement system plan 2 as provided by law;

(2) To fully amortize the total costs of the public employees' retirement system plan 1((,)) and the teachers' retirement system plan 1((~~, and the law enforcement officers' and fire fighters' retirement system plan 1~~)) not later than June 30, 2024;

(3) To maintain the sound actuarially funding of the restated law enforcement officers' and fire fighters' retirement system;

(4) To enable taxpayers and retirement system members to benefit from favorable actuarial experience and investment returns by means of contribution rate reductions for plan 2 members and employers, and by a return of surplus assets from the termination of the law enforcement officers' and fire fighters' retirement system plan 1 to employees, employers, and the state;

(5) To establish predictable long-term employer contribution rates which will remain a relatively constant proportion of the future state budgets; and

((~~(4)~~)) (6) To fund, to the extent feasible, benefit increases for plan 1 members and all benefits for plan 2 and 3 members over the working lives of those members so that the cost of those benefits are paid by the taxpayers who receive the benefit of those members' service.

Sec. 420. RCW 41.45.010 and 2000 c 247 s 501 are each amended to read as follows:

The funding processes established by this chapter ((is)) are intended to achieve the following goals:

(1) To continue to fully fund the public employees' retirement system plans 2 and 3, the teachers' retirement system plans 2 and 3, the school employees' retirement system plans 2 and 3, and the law enforcement officers' and fire fighters' retirement system plan 2 as provided by law;

(3) To maintain the sound actuarial funding of the restated law enforcement officers' and fire fighters' retirement system;

(5) To establish predictable long-term employer contribution rates which will remain a relatively constant proportion of the future state budgets; and

Sec. 421. RCW 41.45.020 and 1998 c 341 s 402 and 1998 c 283 s 1 are each reenacted and amended to read as follows:

As used in this chapter, the following terms have the meanings indicated unless the context clearly requires otherwise.

(1) "Council" means the pension funding council created in RCW 41.45.100.

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

(3) "Restated law enforcement officers' and fire fighters' retirement system ((~~plan 1~~))" and "law enforcement officers' and fire fighters' retirement system plan 2" mean the benefits and funding provisions under chapter 41.26A and 41.26 RCW, respectively.

(4) "Public employees' retirement system plan 1" and "public employees' retirement system plan 2" mean the benefits and funding provisions under chapter 41.40 RCW.

(5) "Teachers' retirement system plan 1," "teachers' retirement system plan 2," and "teachers' retirement system plan 3" mean the benefits and funding provisions under chapter 41.32 RCW.

(6) "School employees' retirement system plan 2" and "school employees' retirement system plan 3" mean the benefits and funding provisions under chapter 41.35 RCW.

(7) "Washington state patrol retirement system" means the retirement benefits provided under chapter 43.43 RCW.

(8) "Unfunded liability" means the unfunded actuarial accrued liability of a retirement system.

(9) "Actuary" or "state actuary" means the state actuary employed under chapter 44.44 RCW.

(10) "State retirement systems" means the retirement systems listed in RCW 41.50.030.

(11) "Work group" means the pension funding work group created in RCW 41.45.120.

(12) "Classified employee" means a member of the Washington school employees' retirement system plan 2 or plan 3 as defined in RCW 41.35.010.

(13) "Teacher" means a member of the teachers' retirement system as defined in RCW 41.32.010(15).

Sec. 422. RCW 41.45.020 and 2000 c 247 s 502 are each amended to read as follows:

As used in this chapter, the following terms have the meanings indicated unless the context clearly requires otherwise.

(1) "Council" means the pension funding council created in RCW 41.45.100.

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

(4) "Public employees' retirement system plan 1," "public employees' retirement system plan 2," and "public employees' retirement system plan 3" mean the benefits and funding provisions under chapter 41.40 RCW.