AN
ACT Relating to clarifying the trusteeship role of the state investment board
and the employee retirement benefits board; amending RCW 41.04.020, 41.04.340,
41.04.605, 41.04.610, 41.04.615, 41.04.620, 41.04.630, 41.04.635, 41.04.640,
41.50.088, 41.50.770, 41.50.780, and 28B.50.874; and adding a new section to
chapter 43.33A RCW.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
41.04.020 and 1982 c 107 s 1 are each amended to read as follows:
Any
employee or group of employees of the state of Washington or any of its
political subdivisions, or of any institution supported, in whole or in part,
by the state or any of its political subdivisions, may authorize the deduction
from his or ((their)) her salaries or wages and payment to
another, the amount or amounts of his or ((their)) her
subscription payments or contributions to any person, firm, or corporation
administering, furnishing, or providing (1) medical, surgical, and hospital
care or either of them, or (2) life insurance or accident and health disability
insurance, or (3) any individual retirement account selected by the employee or
the employee's spouse established under applicable state or federal law((,
or (4) any individual retirement account which is (a) offered through the
committee for deferred compensation, (b) selected by the employee, and (c)
established under applicable state or federal law)): PROVIDED, That such
authorization by said employee or group of employees, shall be first approved
by the head of the department, division office or institution of the state or
any political subdivision thereof, employing such person or group of persons,
and filed with the department of personnel; or in the case of political
subdivisions of the state of Washington, with the auditor of such political
subdivision or the person authorized by law to draw warrants against the funds
of said political subdivision.
Sec.
2. RCW
41.04.340 and 1997 c 232 s 2 are each amended to read as follows:
(1)
An attendance incentive program is established for all eligible employees. As
used in this section the term "eligible employee" means any employee
of the state, other than eligible employees of the community and technical
colleges and the state board for community and technical colleges identified in
RCW 28B.50.553, and teaching and research faculty at the state and regional
universities and The Evergreen State College, entitled to accumulate sick leave
and for whom accurate sick leave records have been maintained. No employee may
receive compensation under this section for any portion of sick leave
accumulated at a rate in excess of one day per month. The state and regional
universities and The Evergreen State College shall maintain complete and
accurate sick leave records for all teaching and research faculty.
(2)
In January of the year following any year in which a minimum of sixty days of
sick leave is accrued, and each January thereafter, any eligible employee may
receive remuneration for unused sick leave accumulated in the previous year at
a rate equal to one day's monetary compensation of the employee for each four
full days of accrued sick leave in excess of sixty days. Sick leave for which
compensation has been received shall be deducted from accrued sick leave at the
rate of four days for every one day's monetary compensation.
(3)
At the time of separation from state service due to retirement or death, an
eligible employee or the employee's estate may elect to receive remuneration at
a rate equal to one day's current monetary compensation of the employee for
each four full days of accrued sick leave.
(4)
((Pursuant to this subsection, in lieu of cash remuneration the state may,
with equivalent funds, provide eligible employees with a benefit plan providing
for reimbursement of medical expenses. The committee for deferred compensation
shall develop any benefit plan established under this subsection, but may offer
and administer the plan only if (a) each eligible employee has the option of
whether to receive cash remuneration or to have his or her employer transfer
equivalent funds to the plan; and (b) the committee has received an opinion
from the United States internal revenue service stating that participating
employees, prior to the time of receiving reimbursement for expenses, will
incur no United States income tax liability on the amount of the equivalent
funds transferred to the plan.
(5)))
Remuneration or benefits received under this section shall not be included for
the purpose of computing a retirement allowance under any public retirement
system in this state.
(((6)
With the exception of subsection (4) of this section,)) (5) This
section shall be administered, and rules shall be adopted to carry out its
purposes, by the Washington personnel resources board for persons subject to
chapter 41.06 RCW: PROVIDED, That determination of classes of eligible
employees shall be subject to approval by the office of financial management.
(((7)))
(6) Should the legislature revoke any remuneration or benefits granted
under this section, no affected employee shall be entitled thereafter to
receive such benefits as a matter of contractual right.
Sec.
3. RCW
41.04.605 and 1987 c 475 s 2 are each amended to read as follows:
Unless
the context clearly requires otherwise, the definitions in this section apply
throughout RCW 41.04.610 through 41.04.635.
(1)
"Salary reduction plan" means a plan whereby state employees and
officers may agree to a reduction of salary which reduction will allow the
employee to participate in benefits offered pursuant to 26 U.S.C. Sec. 125.
(2)
(("Committee")) "Department" means the ((committee
for deferred compensation)) department of retirement systems.
(3)
"Salary" means a state employee's or officer's monthly salary or
wages.
(4)
"Dependent care program" means the program for the care of dependents
pursuant to 26 U.S.C. Sec. 129 financed from funds deposited in the salary
reduction account in the state treasury for the purpose of holding and
disbursing the funds deposited under the auspices of the salary reduction plan.
(5)
"Participant" means an individual who fulfills the eligibility and
enrollment requirements under the salary reduction plan.
(6) "Plan year" means the time period established by the
((committee)) department.
Sec.
4. RCW
41.04.610 and 1987 c 475 s 3 are each amended to read as follows:
The ((committee)) department shall have
responsibility for the formulation and adoption of a plan and policies and
procedures designed to guide, direct, and administer the salary reduction plan.
Sec.
5. RCW
41.04.615 and 1993 c 34 s 1 are each amended to read as follows:
(1)
A plan document describing the salary reduction plan shall be adopted and
administered by the ((committee)) department. The ((committee))
department shall represent the state in all matters concerning the
administration of the plan. The state through the ((committee)) department,
may engage the services of a professional consultant or administrator on a
contractual basis to serve as an agent to assist the ((committee)) department
in carrying out the purposes of RCW 41.04.600 through 41.04.645.
(2)
The ((committee)) department shall formulate and establish
policies and procedures for the administration of the salary reduction plan
that are consistent with existing state law, the internal revenue code, and the
regulations adopted by the internal revenue service as they may apply to the
benefits offered to participants under the plan.
(3)
The funds held by the state for the dependent care program shall be deposited
in the salary reduction account in the state treasury. Any interest in excess
of the amount used to defray the cost of administering the salary reduction
plan shall become a part of the general fund. Unclaimed moneys remaining in
the salary reduction account at the end of a plan year after all timely
submitted claims for that plan year have been processed shall become a part of
the dependent care administrative account. The ((committee)) department
may assess each participant a fee for administering the salary reduction plan.
In addition to moneys for initial costs, moneys may be appropriated from the
general fund or dependent care administrative account for any expense relating
to the administration of the salary reduction plan.
(4)
The dependent care administrative account is created in the state treasury.
The ((committee)) department may periodically bill agencies for
employer savings experienced as the result of dependent care program
participation by employees. All receipts from the following shall be deposited
in the account: (a) Charges to agencies for all or a portion of the estimated
savings due to reductions in employer contributions under the social security
act; (b) charges for other similar savings; (c) unclaimed moneys in the salary
reduction account at the end of the plan year after all timely submitted claims
for that plan year have been processed; and (d) fees charged to participants.
Moneys in the account may be spent only after appropriation. Expenditures from
the account may be used only for any expense related to the administration of
the salary reduction plan.
(5)
Every action taken by the ((committee)) department in
administering RCW 41.04.600 through 41.04.645 shall be presumed to be a fair
and reasonable exercise of the authority vested in or the duties imposed upon
it. The ((committee)) department shall be presumed to have
exercised reasonable care, diligence, and prudence and to have acted
impartially as to all persons interested unless the contrary be proved by clear
and convincing affirmative evidence.
Sec.
6. RCW
41.04.620 and 1987 c 475 s 5 are each amended to read as follows:
(1)
Elected officials and all permanent officers and employees of the state are
eligible to participate in the salary reduction plan and reduce their salary by
agreement with the ((committee)) department. The ((committee))
department 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 salary
reduction agreements with the state.
(3)(a)
In the initial year of the salary reduction plan, 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 reduced and deposited
into a dependent care account to be used for reimbursement of expenses covered
by the plan.
(b)
After the initial year of the salary reduction plan, 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 ((committee)) department, or upon becoming eligible.
(c)
Once an eligible person elects to participate and determines the amount his or
her salary shall be reduced and the benefit for which the funds are to be used
during the plan year, 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 salary reduction plan, the eligible
person shall be informed in writing of all the benefits and reductions that
will occur as a result of such election.
(d)
The ((committee)) department shall provide in the salary
reduction 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.
(4)
The ((committee)) department shall establish as part of the
salary reduction 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 ((committee))
department shall protect participants from forfeiture of rights under
the plan.
(5)
Any salary reduced under the salary reduction plan shall continue to be
included as regular compensation for the purpose of computing the state
retirement and pension benefits earned by the employee.
Sec.
7. RCW
41.04.630 and 1987 c 475 s 7 are each amended to read as follows:
(1)
The ((committee)) department shall keep or cause to be kept full
and adequate accounts and records of the assets, obligations, transactions, and
affairs of a salary reduction plan created under RCW 41.04.615.
(2)
The ((committee)) department shall file an annual report of the
financial condition, transactions, and affairs of the salary reduction plan
under the ((committee's)) department's jurisdiction. A copy of
the annual report shall be filed with the speaker of the house of
representatives, the president of the senate, the governor, and the state
auditor.
(((3) Members of the committee shall be deemed to stand in a fiduciary
relationship to the employees participating in the salary reduction plan and
shall discharge their duties in good faith and with that diligence, care, and
skill which ordinary prudent persons would exercise under similar circumstances
in like positions.))
Sec.
8. RCW
41.04.635 and 1987 c 475 s 8 are each amended to read as follows:
(1)
The state may terminate the salary reduction plan at the end of the plan year
or upon notification of federal action affecting the status of the plan.
(2) The ((committee)) department may amend the salary
reduction plan at any time if the amendment does not affect the rights of the
participants to receive eligible reimbursement from the participants' dependent
care accounts.
Sec.
9. RCW
41.04.640 and 1987 c 475 s 9 are each amended to read as follows:
The
((committee)) department shall adopt rules to implement RCW
41.04.610 through 41.04.635.
Sec.
10. RCW
41.50.088 and 1995 c 239 s 302 are each amended to read as follows:
(1)
The board shall adopt rules as necessary and exercise all the powers and
perform all duties prescribed by law with respect to:
(((1)))
(a) The preselection of options for members to choose from for
self-directed investment deemed by the board to be in the best interest of the
member. At the board's request, the state investment board may provide
investment options for purposes of this subsection;
(((2)))
(b) The selection of optional benefit payment schedules available to
members and survivors of members upon the death, disability, retirement, or
termination of the member. The optional benefit payments may include but not
be limited to: Fixed and participating annuities, joint and survivor
annuities, and payments that bridge to social security or defined benefit plan
payments;
(((3)))
(c) Approval of actuarially equivalent annuities that may be purchased
from the combined plan II and plan III funds under RCW 41.50.075 (2) or (3); and
(((4)))
(d) Determination of the basis for administrative charges to the
self-directed investment fund to offset self-directed account expenses((;
and
(5)
Selection of investment options for the deferred compensation program)).
(2)
The board shall recommend to the state investment board types of options for
participant self-directed investment in the state deferred compensation plan,
as deemed by the board to be reflective of the participants' preferences.
Sec.
11. RCW
41.50.770 and 1995 c 239 s 314 are each amended to read as follows:
(1)
"Employee" as used in this section and RCW 41.50.780 includes all
full-time, part-time, and career seasonal employees of the state, a county, a
municipality, or other political subdivision of the state, whether or not
covered by civil service; elected and appointed officials of the executive
branch of the government, including full-time members of boards, commissions,
or committees; justices of the supreme court and judges of the court of appeals
and of the superior and district courts; and members of the state legislature
or of the legislative authority of any county, city, or town.
(2)
The state, through the department, and any county, municipality, or other political
subdivision of the state acting through its principal supervising official or
governing body is authorized to contract with an employee to defer a portion of
that employee's income, which deferred portion shall in no event exceed the
amount allowable under 26 U.S.C. Sec. 457, and deposit or invest such deferred
portion in a credit union, savings and loan association, bank, or mutual
savings bank or purchase life insurance, shares of an investment company, or
fixed and/or variable annuity contracts from any insurance company or any
investment company licensed to contract business in this state.
(3)
Employees participating in the state deferred compensation plan administered
by the department shall self-direct the investment of the deferred portion of
their income through the selection of investment options as set forth in
subsection (4) of this section.
(4)
The department can provide such plans as ((the employee retirement benefits
board, established under RCW 41.50.086,)) it deems are in the
interests of state employees. In addition to the types of investments
described in this section, the ((department may)) state investment
board, with respect to the state deferred compensation plan, shall invest
the deferred portion of an employee's income, without limitation as to amount,
((in any of the class of investments described in RCW 43.84.150 as in effect
on January 1, 1981)) in accordance with RCW 43.84.150, 43.33A.140, and
41.50.780, and pursuant to investment policy established by the state
investment board for the state deferred compensation plans. The state
investment board, after consultation with the employee retirement benefits
board regarding any recommendations made pursuant to RCW 41.50.088(2), shall
provide a set of options for participants to choose from for investment of the
deferred portion of their income. Any income deferred under such a plan
shall continue to be included as regular compensation, for the purpose of
computing the state or local retirement and pension benefits earned by any
employee.
(((4)))
(5) Coverage of an employee under a deferred compensation plan under
this section shall not render such employee ineligible for simultaneous
membership and participation in any pension system for public employees.
Sec.
12. RCW
41.50.780 and 1995 c 239 s 315 are each amended to read as follows:
(1)
The deferred compensation principal account is hereby created in the state
treasury. Any deficiency in the deferred compensation administrative account
caused by an excess of administrative expenses disbursed from that account over
((earnings of investments of)) balances credited to that account shall
be eliminated by transferring moneys to that account from the deferred
compensation principal account.
(2)
The amount of compensation deferred by employees under agreements entered into
under the authority contained in RCW 41.50.770 shall be paid into the deferred
compensation principal account and shall be sufficient to cover costs of
administration and staffing in addition to such other amounts as determined by
the department. The deferred compensation principal account shall be used to
carry out the purposes of RCW 41.50.770. All eligible state employees shall be
given the opportunity to participate in agreements entered into by the
department under RCW 41.50.770. State agencies shall cooperate with the
department in providing employees with the opportunity to participate.
(3)
Any county, municipality, or other subdivision of the state may elect to
participate in any agreements entered into by the department under RCW
41.50.770, including the making of payments therefrom to the employees
participating in a deferred compensation plan upon their separation from state
or other qualifying service. Accordingly, the deferred compensation principal
account shall be considered to be a public pension or retirement fund within
the meaning of Article XXIX, section 1 of the state Constitution, for the
purpose of determining eligible investments and deposits of the moneys therein.
(4)
All moneys in the state deferred compensation principal account and
the state deferred compensation administrative account, all property and
rights purchased therewith, and all income attributable thereto, shall ((remain
(until made available to the participating employee or other beneficiary)
solely the money, property, and rights of the state and participating counties,
municipalities, and subdivisions (without being restricted to the provision of
benefits under the plan) subject only to the claims of the state's and
participating jurisdictions' general creditors. Participating jurisdictions
shall each retain property rights separately)) be held in trust by the
state investment board, as set forth under RCW 43.33A.030, for the exclusive
benefit of the state deferred compensation plan's participants and their
beneficiaries. Neither the participant, nor the participant's beneficiary or
beneficiaries, nor any other designee, has any right to commute, sell, assign,
transfer, or otherwise convey the right to receive any payments under the
plan. These payments and right thereto are nonassignable and nontransferable.
Unpaid accumulated deferrals are not subject to attachment, garnishment, or
execution and are not transferable by operation of law in event of bankruptcy
or insolvency, except to the extent otherwise required by law.
(5)
The state investment board((, at the request of the employee retirement
benefits board as established under RCW 41.50.086, is authorized to invest))
has the full power to invest moneys in the state deferred
compensation principal account and the state deferred compensation
administrative account in accordance with RCW 43.84.150((. Except as
provided in RCW 43.33A.160)), 43.33A.140, and 41.50.770, and cumulative
investment directions received pursuant to RCW 41.50.770. All investment and
operating costs of the state investment board associated with the investment of
the deferred compensation plan assets shall be paid pursuant to RCW 43.33A.160
and 43.84.160. With the exception of these expenses, one hundred percent
of all earnings from these investments shall accrue directly to the deferred
compensation principal account.
(6)(a)
No state board or commission, agency, or any officer, employee, or member
thereof is liable for any loss or deficiency resulting from participant
investments selected pursuant to RCW 41.50.770(3).
(b)
Neither the employee retirement benefits board nor the state investment board,
nor any officer, employee, or member thereof is liable for any loss or
deficiency resulting from reasonable efforts to implement investment directions
pursuant to RCW 41.50.770(3).
(7)
The deferred compensation administrative account is hereby created in the state
treasury. All expenses of the department pertaining to the deferred
compensation plan including staffing and administrative expenses shall be paid
out of the deferred compensation administrative account. Any excess ((of
earnings of investments of)) balances credited to this account over
administrative expenses disbursed from this account shall be transferred to the
deferred compensation principal account at such time and in such amounts as
may be determined by the department with the approval of the office of
financial management. Any deficiency in the deferred compensation
administrative account caused by an excess of administrative expenses disbursed
from this account ((over earnings of investments of balances credited to
this account)) shall be transferred to this account from the deferred
compensation principal account.
(((7)))
(8) In addition to the duties specified in this section and RCW
41.50.770, the department shall administer the salary reduction plan
established in RCW 41.04.600 through 41.04.645.
(((8)))
(9) The department shall keep or cause to be kept full and adequate
accounts and records of the assets of each individual participant,
obligations, transactions, and affairs of any deferred compensation plans
created under RCW 41.50.770 and this section. The department shall account
for and report on the investment of state deferred compensation plan assets or
may enter into an agreement with the state investment board for such accounting
and reporting.
(((9)))
(10) The department shall file an annual report of the financial
condition, transactions, and affairs of the deferred compensation plans under
its jurisdiction. A copy of the annual report shall be filed with the speaker
of the house of representatives, the president of the senate, the governor, and
the state auditor.
(((10)
Members of the employee retirement benefits board established under RCW
41.50.086 shall be deemed to stand in a fiduciary relationship to the employees
participating in the deferred compensation plans created under RCW 41.50.770
and this section and shall discharge the duties of their respective positions
in good faith and with that diligence, care, and skill which ordinary prudent persons
would exercise under similar circumstances in like positions.))
(11)
The department may adopt rules necessary to carry out the purposes of RCW
41.50.770 and this section.
NEW
SECTION. Sec. 13. A
new section is added to chapter 43.33A RCW to read as follows:
The
state investment board has the full power to establish investment policy,
develop participant investment options, and manage investment funds for the
state deferred compensation plan, consistent with the provisions of RCW
41.50.770 and 41.50.780. The board may continue to offer the investment
options provided as of the effective date of this act until the board
establishes a deferred compensation plan investment policy and adopts new investment
options after considering the recommendations of the employee retirement
benefits board.
Sec.
14. RCW
28B.50.874 and 1991 c 238 s 83 are each amended to read as follows:
When
the state system of community and technical colleges assumes administrative
control of the vocational-technical institutes, personnel employed by the
vocational-technical institutes shall:
(1)
Suffer no reduction in compensation, benefits, seniority, or employment
status. After September 1, 1991, classified employees shall continue to be
covered by chapter 41.56 RCW and faculty members and administrators shall be
covered by chapter 28B.50 RCW;
(2)
To the extent applicable to faculty members, any faculty currently employed on
a "continuing contract" basis under RCW 28A.405.210 be awarded tenure
pursuant to RCW 28B.50.851 through 28B.50.873, except for any faculty members
who are provisional employees under RCW 28A.405.220;
(3)
Be eligible to participate in the health care and other insurance plans
provided by the health care authority and the state employee benefits board
pursuant to chapter 41.05 RCW;
(4)
Be eligible to participate in old age annuities or retirement income plans
under the rules of the state board for community and technical colleges
pursuant to RCW 28B.10.400 or the teachers' retirement system plan I for
personnel employed before July 1, 1977, or plan II for personnel employed after
July 1, 1977, under chapter 41.32 RCW; however, no affected
vocational-technical institute employee shall be required to choose from among
any available retirement plan options prior to six months after September 1,
1991;
(5)
Have transferred to their new administrative college district all accrued sick
and vacation leave and thereafter shall earn and use all such leave under the
rule established pursuant to RCW 28B.50.551;
(6)
Be eligible to participate in the deferred compensation plan ((pursuant to
RCW 41.04.250)) and the dependent care program pursuant to RCW 41.04.600
under the applicable rules ((established by the state deferred
compensation committee)).
An
exclusive bargaining representative certified to represent a bargaining unit
covering employees of a vocational technical institute on September 1, 1991,
shall remain the exclusive representative of such employees thereafter until
and unless such representative is replaced or decertified in accordance with
state law.
Any
collective bargaining agreement in effect on June 30, 1991, shall remain in
effect as it applies to employees of vocational technical institutes until its
expiration or renewal date or until renegotiated or renewed in accordance with
chapter 28B.52 or 41.56 RCW. After the expiration date of a collective
bargaining agreement, all of the terms and conditions specified in the collective
bargaining agreement, as it applies to employees of vocational-technical
institutes, shall remain in effect until the effective date of a subsequent
agreement, not to exceed one year from the termination date stated in the
agreement. The board of trustees and the employees may mutually agree to
continue the terms and conditions of the agreement beyond the one year
extension. However, nothing in this section shall be construed to deny any
employee right granted under chapter 28B.52 or 41.56 RCW. Labor relations
processes and agreements covering faculty members of vocational technical
institutes after September 1, 1991, shall be governed by chapter 28B.52 RCW.
Labor relations processes and agreements covering classified employees of
vocational technical institutes after September 1, 1991, shall continue to be
governed by chapter 41.56 RCW.
