SENATE BILL REPORT

SB 5856

BYSenators Barr, Zimmerman and Garrett

Revising the payment of extra retirement costs by fourth class cities.

Senate Committee on Governmental Operations

Senate Hearing Date(s):March 4, 1987

Majority Report:  Rereferred to Committee on Ways & Means with no recommendation.

      Signed by Senators Halsan, Chairman; Garrett, Vice Chairman; DeJarnatt, McCaslin, Pullen, Zimmerman.

Senate Staff:Walt Corneille (786-7452); Sam Thompson (786-7754)

                  March 4, 1987

AS REPORTED BY COMMITTEE ON GOVERNMENTAL OPERATIONS, MARCH 4, 1987

BACKGROUND:

An employer of an employee whose retirement benefits are based in part on excess compensation must, upon receipt of a billing from the Department of Retirement Systems (Department), pay into the appropriate retirement system the present value of the total estimated cost of all present and future benefits attributable to excess compensation.  Present value is determined at the time of retirement.  Excess compensation includes any payment made to an employee over regular salary plus overtime and 240 hours of unused annual leave.  Employees affected include those employed by cities that do not have their own retirement systems.

Accounts unpaid within 30 days of the Department's billing are assessed an interest penalty of 1 percent per month of the amount due.

SUMMARY:

Fourth class cities are entitled to pay any amount due the Department for retirement benefits attributable to excess compensation in quarterly payments over a five-year period.  Interest is calculated by the Director of the Department based on the prevailing rate for 90-day certificates of deposit.

Fiscal Note:      requested

Senate Committee - Testified: Dorothy Schauerman, Mayor, Odessa