FINAL BILL REPORT

SHB 2644

                                  C 274 L 90

BYHouse Committee on Appropriations (originally sponsored by Representatives Silver, Hine, Sayan, McLean, D. Sommers, H. Sommers, Peery and Spanel; by request of Joint Committee on Pension Policy)

Revising provisions relating to retirement systems.

House Committe on Appropriations

Senate Committee on Ways & Means

SYNOPSIS AS ENACTED

BACKGROUND:

Members of the Teacher's Retirement System Plan II (TRS II) and members of the Public Employee's Retirement System (PERS) who work for educational institutions are eligible to receive 12 months of service credit upon completing nine months of creditable service, the approximate length of a school year.  A member receives one month of service credit if he or she works 90 hours or more during that month.  There are certain months, however, in which the amount of school vacation or inclement weather makes it impossible for a member to work 90 hours.  Piecemeal legislation has been enacted to ensure that members will still receive service credit during months where days are missed due to vacation or inclement weather.  The resulting system is a patchwork of statutes and rules that are difficult and costly to administer.

Calculating service credit for substitute teachers is also a difficult and costly administrative task.  When a substitute teacher works a day, or several days, for a particular school district, the employer does not know whether the substitute will work 90 hours in, and therefore get service credit for, that month.  As a result, the employer does not know whether to deduct contributions from the substitute's pay.  In response to this uncertainty, the school district withholds the member contribution from the substitute's pay and at the end of the month determines whether the member worked enough hours to earn service credit.  The district must also ascertain whether the substitute worked enough hours at other school districts to obtain a total of 90 hours.  If, at the end of this process, the district determines that the substitute did not work 90 hours, the district must return the member contributions that it withheld from the substitute's pay.  This process is repeated monthly for each substitute.

Temporary employees in eligible positions in PERS are exempt from membership for up to six months.  If the position lasts longer than six months, the employee is made a member retroactively and is responsible for making six months of back contributions.  In 1990, back contributions would be approximately 4.7 percent of the employee's gross pay from his or her first six months of work.

If a retired employee returns to his or her job as a "temporary," the employee may work up to the time just prior to the point when he or she would regain membership status and have his or her retirement benefit suspended.  By taking a few weeks off before returning to work, the employee can begin a new six month period that can be repeated an indefinite number of times.

Retirement benefits for retirees from the Judicial Retirement System, the Law Enforcement Officer's and Fire Fighter's Retirement System Plan II (LEOFF II), the Teacher's Retirement System Plan II (TRS II), and the Public Employee's Retirement System Plan II (PERS II), are suspended if the retiree works for a nonfederal public employer. Although this restriction prevents possible double dipping, it also prevents the state from using a growing pool of older experienced workers.

SUMMARY:

The calculation of state retirement service credit is changed from a monthly standard to a yearly standard.  A Teacher's Retirement System (TRS) II member or a Public Employee's Retirement System (PERS) I or II member who works for an educational institution will receive a full year's service credit if he or she works 810 hours in a 12 month period and is employed during nine of those months.  However, a member may not receive service credit for any period prior to the time he or she became employed in an eligible position.  A savings clause in the bill ensures that no service credit accrued under the present system will be revoked.

Accumulation of service credit for substitute teachers is made optional.  The substitute's employer(s) must notify the substitute quarterly of hours worked and compensation earned.  At the end of the school year, the substitute determines whether he or she qualifies for service credit and, if so, decides whether to apply for it.  If the substitute opts for the service credit, he or she must make the requisite contribution.  The employer is not required to contribute until the Department of Retirement Systems receives the substitute's contribution.

The PERS temporary employee membership exclusion is limited to PERS I retirees.  Any person hired in an eligible position, either on a temporary or permanent basis, will be a member of the system and will have contributions withheld from his or her salary.  A PERS I retiree will be allowed to work in an eligible position on a temporary basis for up to five months in a calendar year.  If more than five months are worked, the retiree's benefits will be suspended prospectively.

The plan II prohibition of post retirement employment with a nonfederal public employer is repealed.  Retirees from the plan II systems of Law Enforcement Officers' and Firefighters' Retirement Systems (LEOFF), TRS, and PERS, will be allowed to work for a nonfederal public employer so long as they do not enter an eligible position.  If the retiree does enter such a position, his or her benefits will be suspended.  When eligibility for service credit commences, eligibility to receive retirement benefits ceases.

The benefit eligibility provisions also apply to Judicial Retirement System retirees with the exception of previously elected judges of the Superior Court who retired before the effective date of this act and left a pending case in which they had made discretionary rulings.  In this situation, a judge may hear the pending case as a judge pro tempore without having his or her retirement allowance suspended.

The new service credit systems and post retirement employment provisions are not a right of the member and may be revoked or modified by the Legislature.

VOTES ON FINAL PASSAGE:

      House 97   0

      Senate    48     0 (Senate amended)

      House 92   0 (House concurred)

EFFECTIVE:June 7, 1990

            September 1, 1990 (Sections 1 - 8)