HOUSE BILL NO. 1323


                                                           AS AMENDED BY THE SENATE


                                                                            C 192 L 90



State of Washington                               51st Legislature                              1989 Regular Session


By Representatives Hine, Silver, Sayan, D. Sommers, Patrick, McLean, Bristow, H. Sommers, Bowman, Day, Wineberry, Dorn, Dellwo, Crane, Brough, Valle, Rector, Wang, Betrozoff, R. Fisher, Fraser, Basich, O'Brien, Locke, May, P. King, Phillips, Pruitt, Brekke, Appelwick, Jacobsen, Van Luven, Wood and Horn;by request of Joint Committee on Pension Policy



Read first time 1/20/89 and referred to Committee on Appropriations.



AN ACT Relating to the portability of public employment retirement benefits; amending RCW 41.54.010, 41.54.030, 41.40.120, and 41.54.040; adding a new section to chapter 41.54 RCW; repealing RCW 41.54.060; providing an effective date; and declaring an emergency.




        Sec. 1.  Section 1, chapter 192, Laws of 1987 as amended by section 1, chapter 195, Laws of 1988 and RCW 41.54.010 are each amended to read as follows:

          The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

          (1) "Base salary" means salaries or wages earned by a member of a system during a payroll period for personal services and includes wages and salaries deferred under provisions of the United States internal revenue code, but shall exclude overtime payments, nonmoney maintenance compensation, and lump sum payments for deferred annual sick leave, unused accumulated vacation, unused accumulated annual leave, any form of severance pay, any bonus for voluntary retirement, any other form of leave, or any similar lump sum payment.

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

          (3) "Director" means the director of the department of retirement systems.

          (4) "Dual member" means a person who (a) is or becomes a member of a system on or after July 1, 1988, (b) has been a member of one or more other systems, and (c) has never been retired for service from a retirement system and is not receiving a disability retirement or disability leave benefit from any retirement system listed in RCW 41.50.030 or subsection (6) of this section.

          (5) "Service" means the same as it may be defined in each respective system.  For the purposes of RCW 41.54.030, military service granted under RCW 41.40.170(3) or 43.43.260 may only be based on service accrued under chapter 41.40 or 43.43 RCW, respectively.

          (6) "System" means the retirement systems established under chapters 41.32, 41.40, 41.44, and 43.43 RCW and the city employee retirement systems for Seattle, Tacoma, and Spokane.  The inclusion of an individual first class city system is subject to the procedure set forth in ((RCW 41.54.060)) section 3 of this act.


        Sec. 2.  Section 3, chapter 192, Laws of 1987 as amended by section 2, chapter 195, Laws of 1988 and RCW 41.54.030 are each amended to read as follows:

          (1) A dual member's service in all systems may be combined for the sole purpose of determining the member's eligibility to receive a service retirement allowance.  ((This subsection does not, however, permit a member to combine service for the purpose of determining the percentage factor to be used in calculating a service retirement allowance in the city employee retirement systems for Seattle and Tacoma.))

          (2) A dual member who is eligible to retire under any system may elect to retire from all the member's systems and to receive service retirement allowances calculated as provided in this section.  Each system shall calculate the allowance using its own criteria except that the member shall be allowed to substitute the member's base salary from any system as the compensation used in calculating the allowance.

          (3)  The service retirement allowances from a system which, but for this section, would not be allowed to be paid at this date based on the dual member's age shall be either actuarially adjusted from the earliest age upon which the combined service would have made such dual member eligible in that system, or the dual member may choose to defer the benefit until fully eligible.


          NEW SECTION.  Sec. 3.  A new section is added to chapter 41.54 RCW to read as follows:

          (1) The cities of Seattle, Spokane, and Tacoma shall each have the option of making an irrevocable election to have its employee retirement system included in the coverage of this chapter by adopting a resolution transmitting it to the director and the joint committee on pension policy prior to December 1, 1990.

          The resolution shall indicate the city's desire to be covered by this chapter and its willingness to pay for the cost of the benefits provided by this chapter.

          (2) This chapter shall become effective on January 1, 1991, for each city which adopts a resolution pursuant to subsection (1) of this section.  However, if all three cities adopt such resolutions prior to June 1, 1990, the provisions of this chapter shall become effective for those systems on July 1, 1990.


        Sec. 4.  Section 13, chapter 274, Laws of 1947 as last amended by section 25, chapter 109, Laws of 1988 and RCW 41.40.120 are each amended to read as follows:

          Membership in the retirement system shall consist of all regularly compensated employees and appointive and elective officials of employers, as defined in this chapter, with the following exceptions:

          (1) Persons in ineligible positions;

          (2) Employees of the legislature except the officers thereof elected by the members of the senate and the house and legislative committees, unless membership of such employees be authorized by the said committee;

          (3) (a) Persons holding elective offices or persons appointed directly by the governor:  PROVIDED, That such persons shall have the option of applying for membership during such periods of employment:  AND PROVIDED FURTHER, That any persons holding or who have held elective offices or persons appointed by the governor who are members in the retirement system and who have, prior to becoming such members, previously held an elective office, and did not at the start of such initial or successive terms of office exercise their option to become members, may apply for membership to be effective during such term or terms of office, and shall be allowed to establish the service credit applicable to such term or terms of office upon payment of the employee contributions therefor by the employee with interest as determined by the director and employer contributions therefor by the employer or employee with interest as determined by the director:  AND PROVIDED FURTHER, That all contributions with interest submitted by the employee under this subsection shall be placed in the employee's individual account in the employee's savings fund and be treated as any other contribution made by the employee, with the exception that any 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 not be considered part of the member's annuity for any purpose except withdrawal of contributions;

          (b) A member holding elective office in a town or city who has elected to apply for membership pursuant to (a) of this subsection and who later wishes to be eligible for a retirement allowance shall have the option of ending his or her membership in the retirement system.  A member wishing to end his or her membership under this subsection must file, on a form supplied by the department, a statement indicating that the member agrees to irrevocably abandon any claim for service for future periods served as an elected official of a town or city.  A member who receives more than ten thousand dollars per year in compensation for his or her elective service is not eligible for the option provided by this subsection (3)(b);

          (4) Employees holding membership in, or receiving pension benefits under, any retirement plan operated wholly or in part by an agency of the state or political subdivision thereof, or who are by reason of their current employment contributing to or otherwise establishing the right to receive benefits from any such retirement plan:  PROVIDED, HOWEVER, In any case where the retirement system has in existence an agreement with another retirement system in connection with exchange of service credit or an agreement whereby members can retain service credit in more than one system, such an employee shall be allowed membership rights should the agreement so provide:  AND PROVIDED FURTHER, That an employee shall be allowed membership if otherwise eligible while receiving survivor's benefits:  AND PROVIDED FURTHER, That an employee shall not either before or after June 7, 1984, be excluded from membership or denied service credit pursuant to this subsection solely on account of:  (a) Membership in the plan created under chapter 2.14 RCW; or (b) enrollment under the relief and compensation provisions or the pension provisions of the volunteer firemen's relief and pension fund under chapter 41.24 RCW;

          (5) Patient and inmate help in state charitable, penal, and correctional institutions;

          (6) "Members" of a state veterans' home or state soldiers' home;

          (7) Persons employed by an institution of higher learning or community college, primarily as an incident to and in furtherance of their education or training, or the education or training of a spouse;

          (8) Employees of an institution of higher learning or community college during the period of service necessary to establish eligibility for membership in the retirement plans operated by such institutions;

          (9) Persons rendering professional services to an employer on a fee, retainer, or contract basis or when the income from these services is less than fifty percent of the gross income received from the person's practice of a profession;

          (10) Persons appointed after April 1, 1963, by the liquor control board as agency vendors;

          (11) Employees of a labor guild, association, or organization:  PROVIDED, That elective officials and employees of a labor guild, association, or organization which qualifies as an employer within this chapter shall have the option of applying for membership;

          (12) Persons hired in eligible positions on a temporary basis for a period not to exceed six months:  PROVIDED, That if such employees are employed for more than six months in an eligible position they shall become members of the system;

          (13) Persons employed by or appointed or elected as an official of a first class city that has its own retirement system:  PROVIDED, That any member elected or appointed to an elective office on or after April 1, 1971, shall have the option of continuing as a member of this system in lieu of becoming a member of the city system.  A member who elects to continue as a member of this system shall pay the appropriate member contributions and the city shall pay the employer contributions at the rates prescribed by this chapter.  The city shall also transfer to this system all of such member's accumulated contributions together with such further amounts as necessary to equal all employee and employer contributions which would have been paid into this system on account of such service with the city and thereupon the member shall be granted credit for all such service.  Any city that becomes an employer as defined in RCW 41.40.010(4) as the result of an individual's election under ((the first proviso of)) this subsection shall not be required to have all employees covered for retirement under the provisions of this chapter.  Nothing in this subsection shall prohibit a city of the first class with its own retirement system from:  (a) Transferring all of its current employees to the retirement system established under this chapter, or (b) allowing newly hired employees the option of continuing coverage under the retirement system established by this chapter.

          Notwithstanding any other provision of this chapter, persons transferring from employment with a first class city of over  four hundred thousand population that has its own retirement system to employment with the state department of agriculture may elect to remain within the retirement system of such city and the state shall pay the employer contributions for such persons at like rates as prescribed for employers of other members of such system;

          (14) Employees who (a) are not citizens of the United States, (b) do not reside in the United States, and (c) perform duties outside of the United States;

          (15) Employees who (a) are not citizens of the United States, (b) are not covered by chapter 41.48 RCW, (c) are not excluded from membership under this chapter or chapter 41.04 RCW, (d) are residents of this state, and (e) make an irrevocable election to be excluded from membership, in writing, which is submitted to the director within thirty days after employment in an eligible position;

          (16) Employees who are citizens of the United States and who reside and perform duties for an employer outside of the United States:  PROVIDED, That unless otherwise excluded under this chapter or chapter 41.04 RCW, the employee may apply for membership (a) within thirty days after employment in an eligible position and membership service credit shall be granted from the first day of membership service, and (b) after this thirty-day period, but membership service credit shall be granted only from the date of application;

          (17) The city manager or chief administrative officer of a city or town who serves at the pleasure of an appointing authority:  PROVIDED, That such persons shall have the option of applying for membership within thirty days from date of their appointment to such positions.  Persons serving in such positions as of April 4, 1986, shall continue to be members in the retirement system unless they notify the director in writing prior to December 31, 1986, of their desire to withdraw from membership in the retirement system.  A member who withdraws from membership in the system under this section shall receive a refund of the member's accumulated contributions.


        Sec. 5.  Section 4, chapter 192, Laws of 1987 as amended by section 3, chapter 195, Laws of 1988 and RCW 41.54.040 are each amended to read as follows:

          (1) ((The)) Except where subsection (4) of this section applies, retirement allowances calculated under RCW 41.54.030 shall be paid separately by each respective current and prior system.  Any deductions from such separate payments shall be according to the provisions of the respective systems.

          (2) Postretirement adjustments, if any, shall be applied by the respective systems based on the payments made under subsection (1) of this section.

          (3) If a dual member dies in service in any system, the surviving spouse shall receive the same benefit from each system that would have been received if the member were active in the system at the time of death based on service actually established in that system.  However, this subsection does not make a surviving spouse eligible for the survivor benefits provided in RCW 43.43.270.

          (4) The department shall adopt rules under chapter 34.05 RCW to ensure that where a dual member has service in a system established under chapter 41.32, 41.40, 41.44, or 43.43 RCW and service under the city employee retirement system for Seattle, Tacoma, or Spokane, the entire additional cost incurred as a result of the dual member receiving a benefit under this chapter shall be borne by the city retirement system that the person is a member of.


          NEW SECTION.  Sec. 6.  Section 6, chapter 192, Laws of 1987 and RCW 41.54.060 are each repealed.



          NEW SECTION.  Sec. 7.     This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.

                                                                                                                           Passed the House March 3, 1990.


                                                                                                                                         Speaker of the House.


                                                                                                                      Passed the Senate February 27, 1990.


                                                                                                                                       President of the Senate.