AN
ACT Relating to correcting statutes pertaining to the public employees' and
school employees' retirement systems; amending RCW 41.34.060, 41.35.010, and
41.04.270; reenacting and amending RCW 41.45.061; decodifying RCW 41.54.050;
and providing an effective date.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
41.45.061 and 2000 c 247 s 506 and 2000 c 230 s 2 are each reenacted and
amended to read as follows:
(1)
The required contribution rate for members of the plan 2 teachers' retirement
system shall be fixed at the rates in effect on July 1, 1996, subject to the
following:
(a)
Beginning September 1, 1997, except as provided in (b) of this subsection, the
employee contribution rate shall not exceed the employer plan 2 and 3 rates
adopted under RCW 41.45.060 and 41.45.070 for the teachers' retirement system;
(b)
In addition, the employee contribution rate for plan 2 shall be increased by
fifty percent of the contribution rate increase caused by any plan 2 benefit
increase passed after July 1, 1996;
(c)
In addition, the employee contribution rate for plan 2 shall not be increased
as a result of any distributions pursuant to section 309, chapter 341, Laws of
1998 and RCW 41.31A.020.
(2)
The required contribution rate for members of the school employees' retirement
system plan 2 shall ((be fixed at the rates in effect on September 1, 2000,
for members of the public employees' retirement system plan 2, subject to the
following:
(a)
Except as provided in (b) of this subsection, the member contribution rate
shall not exceed)) equal the school employees' retirement
system employer plan 2 and 3 contribution rate adopted under RCW 41.45.060 and
41.45.070((;)), except as provided in subsection (3) of this section.
(((b)))
(3) The member contribution rate for the school employees' retirement
system plan 2 shall be increased by fifty percent of the contribution rate
increase caused by any plan 2 benefit increase passed after September 1, 2000.
(((3)))
(4) The required contribution rate for members of the public employees'
retirement system plan 2 shall be set at the same rate as the employer combined
plan 2 and plan 3 rate.
(((4)))
(5) The required contribution rate for members of the law enforcement
officers' and fire fighters' retirement system plan 2 shall be set at fifty
percent of the cost of the retirement system.
(((5)))
(6) The employee contribution rates for plan 2 under subsections (3) and
(4) of this section shall not include any increase as a result of any
distributions pursuant to RCW 41.31A.020 and 41.31A.030.
(((6)))
(7) The required plan 2 and 3 contribution rates for employers shall be
adopted in the manner described in RCW 41.45.060.
Sec.
2. RCW
41.34.060 and 2000 c 247 s 404 are each amended to read as follows:
(1)
Except as provided in subsection (3) of this section, the member's account
shall be invested by the state investment board. In order to reduce transaction
costs and address liquidity issues, based upon recommendations of the state
investment board, the department may require members to provide up to ninety
days' notice prior to moving funds from the state investment board portfolio to
self-directed investment options provided under subsection (3) of this section.
(a)
For members of the retirement system as provided for in chapter 41.32 RCW of
plan 3, investment shall be in the same portfolio as that of the teachers'
retirement system combined plan 2 and 3 fund under RCW 41.50.075(2).
(b)
For members of the retirement system as provided for in chapter 41.35 RCW of
plan 3, investment shall be in the same portfolio as that of the school
employees' retirement system combined plan 2 and 3 fund under RCW 41.50.075(4).
(c)
For members of the retirement system as provided for in chapter 41.40 RCW of
plan 3, investment shall be in the same portfolio as that of the public
employees' retirement system combined plan 2 and 3 fund under RCW 41.50.075(3).
(2)
The state investment board shall declare monthly unit values for the portfolios
or funds, or portions thereof, utilized under subsection (1)(a) ((and)),
(b), and (c) of this section. The declared values shall be an
approximation of portfolio or fund values, based on internal procedures of the
state investment board. Such declared unit values and internal procedures
shall be in the sole discretion of the state investment board. The state
investment board may delegate any of the powers and duties under this
subsection, including discretion, pursuant to RCW 43.33A.030. Member accounts
shall be credited by the department with a rate of return based on changes to
such unit values.
(3)
Members may elect to self-direct their investments as set forth in RCW
41.34.130 and 43.33A.190.
Sec.
3. RCW
41.35.010 and 1998 c 341 s 2 are each amended to read as follows:
The
definitions in this section apply throughout this chapter, unless the context
clearly requires otherwise:
(1)
"Retirement system" means the Washington school employees' retirement
system provided for in this chapter.
(2)
"Department" means the department of retirement systems created in
chapter 41.50 RCW.
(3)
"State treasurer" means the treasurer of the state of Washington.
(4)
"Employer," for plan 2 and plan 3 members, means a school district or
an educational service district.
(5)
"Member" means any employee included in the membership of the
retirement system, as provided for in RCW 41.35.030.
(6)(a)
"Compensation earnable" for plan 2 and plan 3 members, means salaries
or wages earned by a member during a payroll period for personal services,
including overtime payments, and shall include wages and salaries deferred
under provisions established pursuant to sections 403(b), 414(h), and 457 of
the United States internal revenue code, but shall exclude nonmoney maintenance
compensation and lump sum or other payments for deferred annual sick leave,
unused accumulated vacation, unused accumulated annual leave, or any form of
severance pay.
(b)
"Compensation earnable" for plan 2 and plan 3 members also includes
the following actual or imputed payments, which are not paid for personal
services:
(i)
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, 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 in this subsection, and
the individual shall receive the equivalent service credit;
(ii)
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:
(A)
The compensation earnable the member would have received had such member not
served in the legislature; or
(B)
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 (b)(ii)(A)
of this subsection is greater than compensation earnable under this (b)(ii)(B)
of this subsection shall be paid by the member for both member and employer
contributions;
(iii)
Assault pay only as authorized by RCW 27.04.100, 72.01.045, and 72.09.240;
(iv)
Compensation that a member would have received but for a disability occurring
in the line of duty only as authorized by RCW 41.40.038;
(v)
Compensation that a member receives due to participation in the leave sharing
program only as authorized by RCW 41.04.650 through 41.04.670; and
(vi)
Compensation that a member receives for being in standby status. For the
purposes of this section, a member is in standby status when not being paid for
time actually worked and the employer requires the member to be prepared to
report immediately for work, if the need arises, although the need may not
arise.
(7)
"Service" for plan 2 and plan 3 members means periods of employment
by a member in an eligible position or positions for one or more employers for
which compensation earnable is paid. Compensation earnable earned for ninety or
more hours in any calendar month shall constitute one service credit month
except as provided in RCW 41.35.180. Compensation earnable earned for at least
seventy hours but less than ninety hours in any calendar month shall constitute
one-half service credit month of service. Compensation earnable earned for less
than seventy hours in any calendar month shall constitute one-quarter service
credit month of service. Time spent in standby status, whether compensated or
not, is not service.
Any
fraction of a year of service shall be taken into account in the computation of
such retirement allowance or benefits.
(a)
Service in any state elective position shall be deemed to be full-time service.
(b)
A member shall receive a total of not more than twelve service credit months of
service for such calendar year. If an individual is employed in an eligible
position by one or more employers the individual shall receive no more than one
service credit month during any calendar month in which multiple service for
ninety or more hours is rendered.
(c)
For purposes of plan 2 and 3 "forty-five days" as used in RCW
28A.400.300 is equal to two service credit months. Use of less than forty-five
days of sick leave is creditable as allowed under this subsection as follows:
(i)
Less than eleven days equals one-quarter service credit month;
(ii)
Eleven or more days but less than twenty-two days equals one-half service
credit month;
(iii)
Twenty-two days equals one service credit month;
(iv)
More than twenty-two days but less than thirty-three days equals one and
one-quarter service credit month; and
(v)
Thirty-three or more days but less than forty-five days equals one and one-half
service credit month.
(8)
"Service credit year" means an accumulation of months of service
credit which is equal to one when divided by twelve.
(9)
"Service credit month" means a month or an accumulation of months of
service credit which is equal to one.
(10)
"Membership service" means all service rendered as a member.
(11)
"Beneficiary" for plan 2 and plan 3 members 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.
(12)
"Regular interest" means such rate as the director may determine.
(13)
"Accumulated contributions" means the sum of all contributions
standing to the credit of a member in the member's individual account,
including any amount paid under RCW 41.50.165(2), together with the regular
interest thereon.
(14)
"Average final compensation" for plan 2 and plan 3 members means the
member's average compensation earnable of the highest consecutive sixty months
of service credit months 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 except under RCW 41.40.710(2).
(15)
"Final compensation" means the annual rate of compensation earnable
by a member at the time of termination of employment.
(16)
"Annuity" means payments for life derived from accumulated
contributions of a member. All annuities shall be paid in monthly
installments.
(17)
"Pension" means payments for life derived from contributions made by
the employer. All pensions shall be paid in monthly installments.
(18)
"Retirement allowance" for plan 2 and plan 3 members means monthly
payments to a retiree or beneficiary as provided in this chapter.
(19)
"Employee" or "employed" means a person who is providing
services for compensation to an employer, unless the person is free from the
employer's direction and control over the performance of work. The department
shall adopt rules and interpret this subsection consistent with common law.
(20)
"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.
(21)
"Retirement" means withdrawal from active service with a retirement
allowance as provided by this chapter.
(22)
"Eligible position" means any position that, as defined by the
employer, normally requires five or more months of service a year for which
regular compensation for at least seventy hours is earned by the occupant
thereof. For purposes of this chapter an employer shall not define
"position" in such a manner that an employee's monthly work for that
employer is divided into more than one position.
(23)
"Ineligible position" means any position which does not conform with
the requirements set forth in subsection (22) of this section.
(24)
"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.
(25)
(("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.
(26)))
"Retiree" means any person who has begun accruing a retirement
allowance or other benefit provided by this chapter resulting from service
rendered to an employer while a member.
(((27)))
(26) "Director" means the director of the department.
(((28)))
(27) "State elective position" means any position held by any
person elected or appointed to statewide office or elected or appointed as a
member of the legislature.
(((29)))
(28) "State actuary" or "actuary" means the person
appointed pursuant to RCW 44.44.010(2).
(((30)))
(29) "Plan 2" means the Washington school employees' retirement
system plan 2 providing the benefits and funding provisions covering persons
who first became members of the public employees' retirement system on and
after October 1, 1977, and transferred to the Washington school employees'
retirement system under RCW 41.40.750.
(((31)))
(30) "Plan 3" means the Washington school employees'
retirement system plan 3 providing the benefits and funding provisions covering
persons who first became members of the system on and after September 1, 2000,
or who transfer from plan 2 under RCW 41.35.510.
(((32)))
(31) "Index" means, for any calendar year, that year's annual
average consumer price index, Seattle, Washington area, for urban wage earners
and clerical workers, all items, compiled by the bureau of labor statistics,
United States department of labor.
(((33)))
(32) "Index A" means the index for the year prior to the
determination of a postretirement adjustment.
(((34)))
(33) "Index B" means the index for the year prior to index A.
(((35)))
(34) "Adjustment ratio" means the value of index A divided by
index B.
(((36)))
(35) "Separation from service" occurs when a person has
terminated all employment with an employer.
(((37)))
(36) "Member account" or "member's account" for
purposes of plan 3 means the sum of the contributions and earnings on behalf of
the member in the defined contribution portion of plan 3.
(((38)))
(37) "Classified employee" means an employee of a school
district or an educational service district who is not eligible for membership
in the teachers' retirement system established under chapter 41.32 RCW.
Sec.
4. RCW
41.04.270 and 1988 c 195 s 5 are each amended to read as follows:
(1)
Notwithstanding any provision of chapter 2.10, 2.12, 41.26, 41.28, 41.32, 41.35,
41.40, or 43.43 RCW to the contrary, on and after March 19, 1976, any member or
former member who (a) receives a retirement allowance earned by said former
member as deferred compensation from any public retirement system authorized by
the general laws of this state, or (b) is eligible to receive a retirement
allowance from any public retirement system listed in RCW 41.50.030, but
chooses not to apply, or (c) is the beneficiary of a disability allowance from
any public retirement system listed in RCW 41.50.030 shall be estopped from
becoming a member of or accruing any contractual rights whatsoever in any other
public retirement system listed in RCW 41.50.030: PROVIDED, That (a) and (b)
of this subsection shall not apply to persons who have accumulated less than
fifteen years service credit in any such system.
(2)
Nothing in this section is intended to apply to any retirement system except
those listed in RCW 41.50.030 and the city employee retirement systems for
Seattle, Tacoma, and Spokane. Subsection (1)(b) of this section does not apply
to a dual member as defined in RCW 41.54.010.
NEW
SECTION. Sec. 5. RCW
41.54.050 (Election to establish membership in public employees' retirement
system) is decodified.
NEW
SECTION. Sec. 6.
Sections 1 and 2 of this act take effect March 1, 2002.
