AN ACT Relating to the public employees' retirement system; amending RCW 41.40.010, 41.40.165, 41.40.340, and 41.40.370; adding a new section to chapter 41.40 RCW; and repealing RCW 41.40.005, 41.40.600, 41.40.610, 41.40.620, 41.40.625, 41.40.630, 41.40.640, 41.40.650, 41.40.660, 41.40.670, 41.40.680, 41.40.690, 41.40.700, 41.40.710, 41.40.720, 41.40.730, 41.40.740, 41.40.900, and 41.40.920.

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

NEW SECTION. Sec. 1. A new section is added to chapter 41.40 RCW to read as follows:

Those persons who have established membership in the retirement system on or after October 1, 1977, and before the effective date of this act, shall become members of the retirement system established before October 1, 1977, commonly known as PERS I, without any loss of rights and without any additional contributions for this period. These persons shall be considered to have been members of PERS I for all purposes.

Sec. 2. Section 1, chapter 274, Laws of 1947 as last amended by section 1, chapter 69, Laws of 1983 and RCW 41.40.010 are each amended to read as follows:

As used in this chapter, unless a different meaning is plainly required by the context:

(1) "Retirement system" means the public employees' retirement system provided for in this chapter.

(2) "Retirement board" means the board provided for in this chapter and chapter 41.26 RCW.

(3) "State treasurer" means the treasurer of the state of Washington.

(4) ((~~(a)~~)) "Employer" ((~~for persons who establish membership in the retirement system on or before September 30, 1977,~~)) means every branch, department, agency, commission, board, and office of the state, any political subdivision or association of political subdivisions of the state admitted into the retirement system, and legal entities authorized by RCW 35.63.070 and 36.70.060 or chapter 39.34 RCW as now or hereafter amended; and the term shall also include any labor guild, association, or organization the membership of a local lodge or division of which is comprised of at least forty percent employees of an employer (other than such labor guild, association, or organization) within this chapter. The term may also include any city of the first class that has its own retirement system.

(((b) "Employer" for persons who establish membership in the retirement system on or after October 1, 1977, means every branch, department, agency, commission, board, and office of the state, and any political subdivision and municipal corporation of the state admitted into the retirement system, including public agencies created pursuant to RCW 35.63.070, 36.70.060, and 39.34.030.))

(5) "Member" means any employee included in the membership of the retirement system, as provided for in RCW 41.40.120.

(6) "Original member" of this retirement system means:

(a) Any person who became a member of the system prior to April 1, 1949;

(b) Any person who becomes a member through the admission of an employer into the retirement system on and after April 1, 1949, and prior to April 1, 1951;

(c) Any person who first becomes a member by securing employment with an employer prior to April 1, 1951, provided the member has rendered at least one or more years of service to any employer prior to October 1, 1947;

(d) Any person who first becomes a member through the admission of an employer into the retirement system on or after April 1, 1951, provided, such person has been in the regular employ of the employer for at least six months of the twelve-month period preceding the said admission date;

(e) Any member who has restored all contributions that may have been withdrawn as provided by RCW 41.40.150 and who on the effective date of the individual's retirement becomes entitled to be credited with ten years or more of membership service except that the provisions relating to the minimum amount of retirement allowance for the member upon retirement at age seventy as found in RCW 41.40.190(4) shall not apply to the member;

(f) Any member who has been a contributor under the system for two or more years and who has restored all contributions that may have been withdrawn as provided by RCW 41.40.150 and who on the effective date of the individual's retirement has rendered five or more years of service for the state or any political subdivision prior to the time of the admission of the employer into the system; except that the provisions relating to the minimum amount of retirement allowance for the member upon retirement at age seventy as found in RCW 41.40.190(4) shall not apply to the member.

(7) "New member" means a person who becomes a member on or after April 1, 1949, except as otherwise provided in this section.

(8) ((~~(a)~~)) "Compensation earnable" ((~~for persons who establish membership in the retirement system on or before September 30, 1977,~~)) means salaries or wages earned during a payroll period for personal services and where the compensation is not all paid in money, maintenance compensation shall be included upon the basis of the schedules established by the member's employer: PROVIDED, That retroactive payments to an individual by an employer on reinstatement of the employee in a position, or payments by an employer to an individual in lieu of reinstatement in a position which are awarded or granted as the equivalent of the salary or wage which the individual would have earned during a payroll period shall be considered compensation earnable and the individual shall receive the equivalent service credit: PROVIDED FURTHER, That if a leave of absence is taken by an individual for the purpose of serving in the state legislature, the salary which would have been received for the position from which the leave of absence was taken, shall be considered as compensation earnable if the employee's contribution is paid by the employee and the employer's contribution is paid by the employer or employee.

(((b) "Compensation earnable" for persons who establish membership in the retirement system on or after October 1, 1977, means salaries or wages earned by a member during a payroll period for personal services, including overtime payments, as reported by the employer on the wage and tax statement submitted to the federal internal revenue service, and shall include wages and salaries deferred under provisions established pursuant to sections 403(b) and 457 of the United States Internal Revenue Code, but shall exclude nonmoney maintenance compensation and lump sum payments for deferred annual sick leave, unused accumulated vacation, unused accumulated annual leave, or any form of severance pay: PROVIDED, That retroactive payments to an individual by an employer on reinstatement of the employee in a position, or payments by an employer to an individual in lieu of reinstatement in a position which are awarded or granted as the equivalent of the salary or wage which the individual would have earned during a payroll period shall be considered compensation earnable to the extent provided above, and the individual shall receive the equivalent service credit: PROVIDED FURTHER, That in any year in which a member serves in the legislature, the member shall have the option of having such member's compensation earnable be the greater of:

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

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

(9) ((~~(a)~~)) "Service" ((~~for persons who establish membership in the retirement system on or before September 30, 1977,~~)) means periods of employment rendered to any employer for which compensation is paid, and includes time spent in office as an elected or appointed official of an employer. Full time work for seventy hours or more in any given calendar month shall constitute one month of service. Only months of service shall be counted in the computation of any retirement allowance or other benefit provided for in this chapter. Years of service shall be determined by dividing the total number of months of service by twelve. Any fraction of a year of service as so determined shall be taken into account in the computation of such retirement allowance or benefits.

Members employed by the state school for the blind, or the state school for the deaf shall receive twelve months of service for each contract year or school year of employment commencing on or after June 15, 1979.

Each member who is employed by an institution of higher education or a community college shall receive twelve months of service for each academic year of employment commencing on or after June 15, 1979, in which the member makes member contributions under this chapter for each month of such academic year, and the member is employed in a position which is restricted as to duration by the employer to the academic year.

Service by a state employee officially assigned by the state on a temporary basis to assist another public agency, shall be considered as service as a state employee: PROVIDED, That service to any other public agency shall not be considered service as a state employee if such service has been used to establish benefits in any other public retirement system: PROVIDED FURTHER, That an individual shall receive no more than a total of twelve months of service credit during any calendar year: PROVIDED FURTHER, That where an individual is employed by two or more employers the individual shall only receive one months service credit during any calendar month in which multiple service for seventy or more hours is rendered.

During the regular contract year or school year of employment, members employed by school districts shall receive service credit in any month in which the school is closed for a vacation period of five calendar days or more. The member shall have been employed or on paid leave of absence for at least three and one-half hours each day the school was open or shall have received compensation for service averaging at least three and one-half hours for each such day.

(((b) "Service" for persons who establish membership in the retirement system on or after October 1, 1977, means periods of employment by a member for one or more employers for which compensation earnable is earned for ninety or more hours per calendar month.

During the regular contract year or school year of employment, members employed by school districts shall receive service credit in any month in which the school is closed for a vacation period of five calendar days or more. The member shall have been employed or on paid leave of absence for at least four and one-half hours each day the school was open or shall have received compensation for service averaging at least four and one-half hours for each such day.

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

Members employed by school districts, the state school for the blind, the state school for the deaf, institutions of higher education, or community colleges shall receive twelve months of service for each contract year or school year of employment.

Service in any state elective position shall be deemed to be full time service, except that persons serving in state elective positions who are members of the teachers' retirement system or law enforcement officers' and fire fighters' retirement system at the time of election or appointment to such position may elect to continue membership in the teachers' retirement system or law enforcement officers' and fire fighters' retirement system.

A member shall receive a total of not more than twelve months of service for such calendar year: PROVIDED, That when an individual is employed by two or more employers the individual shall only receive one month's service credit during any calendar month in which multiple service for ninety or more hours is rendered.))

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

(11) "Membership service" means:

(a) All service rendered, as a member, after October 1, 1947;

(b) All service after October 1, 1947, to any employer prior to the time of its admission into the retirement system: PROVIDED, That an amount equal to the employer and employee contributions which would have been paid to the retirement system on account of such service shall have been paid to the retirement system with interest (as computed by the department) on the employee's portion prior to retirement of such person, by the employee or his employer, except as qualified by RCW 41.40.120: PROVIDED FURTHER, That employer contributions plus employee contributions with interest submitted by the employee under this subsection shall be placed in the employee's individual account in the employees' savings fund and be treated as any other contribution made by the employee, with the exception that the contributions submitted by the employee in payment of the employer's obligation, together with the interest the director may apply to the employer's contribution, shall be excluded from the calculation of the member's annuity in the event the member selects a benefit with an annuity option;

(c) Service not to exceed six consecutive months of probationary service rendered after April 1, 1949, and prior to becoming a member, in the case of any member, upon payment in full by such member of the total amount of the employer's contribution to the retirement fund which would have been required under the law in effect when such probationary service was rendered if the member had been a member during such period, except that the amount of the employer's contribution shall be calculated by the director based on the first month's compensation earnable as a member;

(d) Service not to exceed six consecutive months of probationary service, rendered after October 1, 1947, and before April 1, 1949, and prior to becoming a member, in the case of any member, upon payment in full by such member of five percent of such member's salary during said period of probationary service, except that the amount of the employer's contribution shall be calculated by the director based on the first month's compensation earnable as a member.

(12) ((~~(a)~~)) "Beneficiary" ((~~for persons who establish membership in the retirement system on or before September 30, 1977,~~)) means any person in receipt of a retirement allowance, pension or other benefit provided by this chapter.

(((b) "Beneficiary" for persons who establish membership in the retirement system on or after October 1, 1977, 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.))

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

(14) "Accumulated contributions" means the sum of all contributions standing to the credit of a member in the member's individual account together with the regular interest thereon.

(15) ((~~(a)~~)) "Average final compensation" ((~~for persons who establish membership in the retirement system on or before September 30, 1977,~~)) means the annual average of the greatest compensation earnable by a member during any consecutive two year period of service for which service credit is allowed; or if the member has less than two years of service then the annual average compensation earnable during the total years of service for which service credit is allowed.

(((b) "Average final compensation" for persons who establish membership in the retirement system on or after October 1, 1977, means the member's average compensation earnable of the highest consecutive sixty months of service prior to such member's retirement, termination, or death. Periods constituting authorized leaves of absence may not be used in the calculation of average final compensation.))

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

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

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

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

(20) "Employee" means any person who may become eligible for membership under this chapter, as set forth in RCW 41.40.120.

(21) "Actuarial equivalent" means a benefit of equal value when computed upon the basis of such mortality and other tables as may be adopted by the director.

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

(23) "Eligible position" means:

(a) Any position which normally requires five or more uninterrupted months of service a year for which regular compensation is paid to the occupant thereof;

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

(24) "Ineligible position" means any position which does not conform with the requirements set forth in subdivision (23).

(25) "Leave of absence" means the period of time a member is authorized by the employer to be absent from service without being separated from membership.

(26) "Totally incapacitated for duty" means total inability to perform the duties of a member's employment or office or any other work for which the member is qualified by training or experience.

(27) (("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.

~~(28)~~)) "Department" means the department of retirement systems created in chapter 41.50 RCW.

((~~(29)~~)) (28) "Director" means the director of the department.

((~~(30)~~)) (29) "State elective position" means any position held by any person elected or appointed to state-wide office or elected or appointed as a member of the legislature.

((~~(31)~~)) (30) "State actuary" or "actuary" means the person appointed pursuant to RCW 44.44.010(2).

Sec. 3. Section 4, chapter 34, Laws of 1975-'76 2nd ex. sess. as amended by section 17, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.165 are each amended to read as follows:

No person appointed to membership on any committee, board, or commission on or after July 1, 1976, who is compensated for service on such committee, board, or commission for less than ten days or seventy hours in any month, whichever amount is less, shall receive service credit for such service for that month((: PROVIDED, That on and after October 1, 1977, appointive and elective officials who receive monthly compensation earnable from an employer in an amount equal to or less than ninety times the state minimum hourly wage shall not receive any service credit for such employment)).

Sec. 4. Section 35, chapter 274, Laws of 1947 as amended by section 18, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.340 are each amended to read as follows:

The deductions from the compensation of members, provided for in RCW 41.40.330 ((~~or 41.40.650~~)), shall be made notwithstanding that the minimum compensation provided for by law for any member shall be reduced thereby. Every member shall be deemed to consent and agree to the deductions made and provided for in this chapter and shall receipt in full for his salary or compensation, and payment less said deductions shall be a full and complete discharge and acquittance of all claims and demands whatsoever for the services rendered by such person during the period covered by such payment, except as to benefits provided for under this chapter.

Sec. 5. Section 38, chapter 274, Laws of 1947 as last amended by section 22, chapter 52, Laws of 1982 1st ex. sess. and RCW 41.40.370 are each amended to read as follows:

(1) The director shall ascertain and report to each employer the contribution rates necessary to meet present and future pension liabilities of the system for the ensuing biennium or fiscal year, whichever is applicable. The amount to be so provided shall be computed by applying the rates of contribution as established by RCW 41.40.361 ((~~or 41.40.650~~)) to an estimate of the total compensation earnable of all the said employer's members during the period for which provision is to be made.

(2) Beginning April 1, 1949, ((~~or October 1, 1977, as the case may be,~~)) the amount to be collected as the employer's contribution shall be computed by applying the ((~~applicable~~)) rates established by RCW 41.40.361 ((~~or 41.40.650~~)) to the total compensation earnable of employer's members as shown on the current payrolls of the said employer. Each said employer shall compute at the end of each month the amount due for that month and the same shall be paid as are its other obligations.

(3) In the event of failure, for any reason, of an employer other than a political subdivision of the state to have remitted amounts due for membership service of any of the employer's members rendered during a prior biennium, the director shall bill such employer through the director of financial management for such employer's contribution together with such charges as the director deems appropriate in accordance with RCW 41.50.120. Such billing shall be paid by the employer as, and the same shall be, a proper charge against any moneys available or appropriated to such employer for payment of current biennial payrolls.

NEW SECTION. Sec. 6. The following acts or parts of acts are each repealed:

(1) Section 21, chapter 295, Laws of 1977 ex. sess., section 6, chapter 249, Laws of 1979 ex. sess. and RCW 41.40.005;

(2) Section 1, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.600;

(3) Section 2, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.610;

(4) Section 3, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.620;

(5) Section 3, chapter 144, Laws of 1982 and RCW 41.40.625;

(6) Section 4, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.630;

(7) Section 5, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.640;

(8) Section 6, chapter 295, Laws of 1977 ex. sess., section 12, chapter 184, Laws of 1984 and RCW 41.40.650;

(9) Section 7, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.660;

(10) Section 8, chapter 295, Laws of 1977 ex. sess., section 5, chapter 18, Laws of 1982 and RCW 41.40.670;

(11) Section 9, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.680;

(12) Section 10, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.690;

(13) Section 11, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.700;

(14) Section 12, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.710;

(15) Section 13, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.720;

(16) Section 14, chapter 295, Laws of 1977 ex. sess., section 23, chapter 52, Laws of 1982 1st ex. sess. and RCW 41.40.730;

(17) Section 15, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.740;

(18) Section 24, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.900; and

(19) Section 25, chapter 295, Laws of 1977 ex. sess. and RCW 41.40.920.