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Third Substitute S.B. 43

Representative Stephen E. Sandstrom proposes the following substitute bill:


             1     
POST-RETIREMENT EMPLOYMENT

             2     
AMENDMENTS

             3     
2010 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Daniel R. Liljenquist

             6     
House Sponsor: Brad L. Dee

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies the Utah State Retirement and Insurance Benefit Act by amending
             11      provisions related to a retiree who returns to work for a participating employer, and the
             12      restrictions on the maximum retirement allowance certain employees can accrue.
             13      Highlighted Provisions:
             14          This bill:
             15          .    defines certain terms;
             16          .    repeals a requirement that a participating employer who hires a retiree contribute the
             17      same percentage of a retiree's salary that the participating employer would have
             18      been required to contribute if the retiree were an active member of the retirement
             19      system;
             20          .    provides that a participating employer who hires a retiree before July 1, 2010 may
             21      not contribute an amount that exceeds the normal cost rate to a qualified defined
             22      contribution plan;
             23          .    provides that a retiree from the Utah State Retirement System who returns to work
             24      with a participating employer on or after July 1, 2010, is returned to active member
             25      status to earn additional service credit if the retiree is reemployed within one year

             26      from retirement;
             27          .    provides that a retiree who returns to work with a participating employer after a year
             28      from the date of retirement may elect to either:
             29              .    receive a retirement allowance and forfeit any retirement contribution related to
             30      the reemployment; or
             31              .    cancel the retiree's retirement allowance and earn additional service credit for
             32      the period of reemployment;
             33          .    requires a participating employer to pay the amortization rate to the retirement
             34      system that would have covered the retiree who is:
             35              .    reemployed after July 1, 2010; and
             36              .    receiving a retirement allowance;
             37          .    repeals the maximum allowance that a member may receive for a member who
             38      initially retires on or after July 1, 2010, in the following systems:
             39              .    the Public Safety Contributory Retirement System;
             40              .    the Public Safety Noncontributory Retirement System;
             41              .    the Firefighters' Retirement System;
             42              .    the Judges' Contributory Retirement System; and
             43              .    the Judges' Noncontributory Retirement System;
             44          .    prevents the Commissioner of Public Safety, an elected or appointed sheriff, or a
             45      chief of police from retiring in place on or after July 1, 2010; and
             46          .    makes technical changes.
             47      Monies Appropriated in this Bill:
             48          None
             49      Other Special Clauses:
             50          This bill takes effect on July 1, 2010.
             51      Utah Code Sections Affected:
             52      AMENDS:
             53          49-11-102, as last amended by Laws of Utah 2009, Chapter 101
             54          49-11-405, as renumbered and amended by Laws of Utah 2002, Chapter 250
             55          49-11-504, as last amended by Laws of Utah 2009, Chapter 101
             56          49-12-701, as renumbered and amended by Laws of Utah 2002, Chapter 250

             57          49-13-701, as renumbered and amended by Laws of Utah 2002, Chapter 250
             58          49-14-203, as last amended by Laws of Utah 2006, Chapter 260
             59          49-14-402, as renumbered and amended by Laws of Utah 2002, Chapter 250
             60          49-15-402, as renumbered and amended by Laws of Utah 2002, Chapter 250
             61          49-15-203, as last amended by Laws of Utah 2005, Chapter 176
             62          49-16-203, as last amended by Laws of Utah 2005, Chapter 116
             63          49-16-402, as last amended by Laws of Utah 2003, Chapter 240
             64          49-17-402, as renumbered and amended by Laws of Utah 2002, Chapter 250
             65          49-18-402, as renumbered and amended by Laws of Utah 2002, Chapter 250
             66      ENACTS:
             67          49-11-505, Utah Code Annotated 1953
             68     
             69      Be it enacted by the Legislature of the state of Utah:
             70          Section 1. Section 49-11-102 is amended to read:
             71           49-11-102. Definitions.
             72          As used in this title:
             73          (1) (a) "Active member" means a member who is employed or who has been employed
             74      by a participating employer within the previous 120 days.
             75          (b) "Active member" does not include retirees.
             76          (2) "Actuarial equivalent" means a benefit of equal value when computed upon the
             77      basis of mortality tables as recommended by the actuary and adopted by the executive director,
             78      including regular interest.
             79          (3) "Actuarial interest rate" means the interest rate as recommended by the actuary and
             80      adopted by the board upon which the funding of system costs and benefits are computed.
             81          (4) (a) "Agency" means:
             82          (i) a department, division, agency, office, authority, commission, board, institution, or
             83      hospital of the state;
             84          (ii) a county, municipality, school district, local district, or special service district;
             85          (iii) a state college or university; or
             86          (iv) any other participating employer.
             87          (b) "Agency" does not include an entity listed under Subsection (4)(a)(i) that is a

             88      subdivision of another entity listed under Subsection (4)(a).
             89          (5) "Allowance" or "retirement allowance" means the pension plus the annuity,
             90      including any cost of living or other authorized adjustments to the pension and annuity.
             91          (6) "Alternate payee" means a member's former spouse or family member eligible to
             92      receive payments under a Domestic Relations Order in compliance with Section 49-11-612 .
             93          (7) "Amortization rate" means the board certified percent of salary required to amortize
             94      the unfunded actuarial accrued liability in accordance with policies established by the board
             95      upon the advice of the actuary.
             96          [(7)] (8) "Annuity" means monthly payments derived from member contributions.
             97          [(8)] (9) "Appointive officer" means an employee appointed to a position for a definite
             98      and fixed term of office by official and duly recorded action of a participating employer whose
             99      appointed position is designated in the participating employer's charter, creation document, or
             100      similar document, and who earns during the first full month of the term of office $500 or more,
             101      indexed as of January 1, 1990, as provided in Section 49-12-407 .
             102          [(9)] (10) (a) "At-will employee" means a person who is employed by a participating
             103      employer and:
             104          (i) who is not entitled to merit or civil service protection and is generally considered
             105      exempt from a participating employer's merit or career service personnel systems;
             106          (ii) whose on-going employment status is entirely at the discretion of the person's
             107      employer; or
             108          (iii) who may be terminated without cause by a designated supervisor, manager, or
             109      director.
             110          (b) "At-will employee" does not include a career employee who has obtained a
             111      reasonable expectation of continued employment based on inclusion in a participating
             112      employer's merit system, civil service protection system, or career service personnel systems,
             113      policies, or plans.
             114          [(10)] (11) "Beneficiary" means any person entitled to receive a payment under this
             115      title through a relationship with or designated by a member, participant, covered individual, or
             116      alternate payee of a defined contribution plan.
             117          [(11)] (12) "Board" means the Utah State Retirement Board established under Section
             118      49-11-202 .

             119          [(12)] (13) "Board member" means a person serving on the Utah State Retirement
             120      Board as established under Section 49-11-202 .
             121          (14) "Certified contribution rate" means the board certified percent of salary paid on
             122      behalf of an active member to the office to maintain the system on a financially and actuarially
             123      sound basis.
             124          [(13)] (15) "Contributions" means the total amount paid by the participating employer
             125      and the member into a system or to the Utah Governors' and Legislators' Retirement Plan under
             126      Chapter 19, Utah Governors' and Legislators' Retirement Act.
             127          [(14)] (16) "Council member" means a person serving on the Membership Council
             128      established under Section 49-11-202 .
             129          [(15)] (17) "Covered individual" means any individual covered under Chapter 20,
             130      Public Employees' Benefit and Insurance Program Act.
             131          [(16)] (18) "Current service" means covered service as defined in Chapters 12, 13, 14,
             132      15, 16, 17, 18, and 19.
             133          [(17)] (19) "Defined benefit" or "defined benefit plan" or "defined benefit system"
             134      means a system or plan offered under this title to provide a specified allowance to a retiree or a
             135      retiree's spouse after retirement that is based on a set formula involving one or more of the
             136      following factors:
             137          (a) years of service;
             138          (b) final average monthly salary; or
             139          (c) a retirement multiplier.
             140          [(18)] (20) "Defined contribution" or "defined contribution plan" means any defined
             141      contribution plan or deferred compensation plan authorized under the Internal Revenue Code
             142      and administered by the board.
             143          [(19)] (21) "Educational institution" means a political subdivision or instrumentality of
             144      the state or a combination thereof primarily engaged in educational activities or the
             145      administration or servicing of educational activities, including:
             146          (a) the State Board of Education and its instrumentalities;
             147          (b) any institution of higher education and its branches;
             148          (c) any school district and its instrumentalities;
             149          (d) any vocational and technical school; and

             150          (e) any entity arising out of a consolidation agreement between entities described under
             151      this Subsection [(19)] (21).
             152          [(20)] (22) (a) "Employer" means any department, educational institution, or political
             153      subdivision of the state eligible to participate in a government-sponsored retirement system
             154      under federal law.
             155          (b) "Employer” may also include an agency financed in whole or in part by public
             156      funds.
             157          [(21)] (23) "Exempt employee" means an employee working for a participating
             158      employer:
             159          (a) who is not eligible for service credit under Section 49-12-203 , 49-13-203 ,
             160      49-14-203 , 49-15-203 , or 49-16-203 ; and
             161          (b) for whom a participating employer is not required to pay contributions or
             162      nonelective contributions.
             163          [(22)] (24) "Final average monthly salary" means the amount computed by dividing the
             164      compensation received during the final average salary period under each system by the number
             165      of months in the final average salary period.
             166          [(23)] (25) "Fund” means any fund created under this title for the purpose of paying
             167      benefits or costs of administering a system, plan, or program.
             168          [(24)] (26) (a) "Inactive member" means a member who has not been employed by a
             169      participating employer for a period of at least 120 days.
             170          (b) "Inactive member" does not include retirees.
             171          [(25)] (27) (a) "Member" means a person, except a retiree, with contributions on
             172      deposit with a system, the Utah Governors' and Legislators' Retirement Plan under Chapter 19,
             173      Utah Governors' and Legislators' Retirement Act, or with a terminated system.
             174          (b) "Member" also includes leased employees within the meaning of Section 414(n)(2)
             175      of the Internal Revenue Code, if the employees have contributions on deposit with the office.
             176      If leased employees constitute less than 20% of the participating employer's work force that is
             177      not highly compensated within the meaning of Section 414(n)(5)(c)(ii), Internal Revenue Code,
             178      "member" does not include leased employees covered by a plan described in Section 414(n)(5)
             179      of the federal Internal Revenue Code.
             180          [(26)] (28) "Member contributions" means the sum of the contributions paid to a

             181      system or the Utah Governors' and Legislators' Retirement Plan, including refund interest if
             182      allowed by a system, and which are made by:
             183          (a) the member; and
             184          (b) the participating employer on the member's behalf under Section 414(h) of the
             185      Internal Revenue Code.
             186          [(27)] (29) "Nonelective contribution" means an amount contributed by a participating
             187      employer into a participant's defined contribution account.
             188          (30) "Normal cost rate":
             189          (a) means the percent of salary that is necessary for a retirement system that is fully
             190      funded to maintain its fully funded status; and
             191          (b) is determined by the actuary based on the assumed rate of return established by the
             192      board.
             193          [(28)] (31) "Office" means the Utah State Retirement Office.
             194          [(29)] (32) "Participant" means an individual with voluntary deferrals or nonelective
             195      contributions on deposit with the defined contribution plans administered under this title.
             196          [(30)] (33) "Participating employer" means a participating employer, as defined by
             197      [Chapters 12, 13, 14, 15, 16, 17, and 18] Chapter 12, Public Employees' Contributory
             198      Retirement Act, Chapter 13, Public Employees' Noncontributory Retirement Act, Chapter 14,
             199      Public Safety Contributory Retirement Act, Chapter 15, Public Safety Noncontributory
             200      Retirement Act, Chapter 16, Firefighters' Retirement Act, Chapter 17, Judges' Contributory
             201      Retirement Act, and Chapter 18, Judges' Noncontributory Retirement Act, or an agency
             202      financed in whole or in part by public funds which is participating in a system or plan as of
             203      January 1, 2002.
             204          [(31)] (34) "Pension" means monthly payments derived from participating employer
             205      contributions.
             206          [(32)] (35) "Plan" means the Utah Governors' and Legislators' Retirement Plan created
             207      by Chapter 19, Utah Governors' and Legislators' Retirement Act, or the defined contribution
             208      plans created under Section 49-11-801 .
             209          [(33)] (36) (a) "Political subdivision" means any local government entity, including
             210      cities, towns, counties, and school districts, but only if the subdivision is a juristic entity that is
             211      legally separate and distinct from the state and only if its employees are not by virtue of their

             212      relationship to the entity employees of the state.
             213          (b) "Political subdivision" includes local districts, special service districts, or
             214      authorities created by the Legislature or by local governments, including the office.
             215          (c) "Political subdivision" does not include a project entity created under Title 11,
             216      Chapter 13, Interlocal Cooperation Act, that was formed prior to July 1, 1987.
             217          [(34)] (37) "Program" means the Public Employees' Insurance Program created under
             218      Chapter 20, Public Employees' Benefit and Insurance Program Act, or the Public Employees'
             219      Long-Term Disability program created under Chapter 21, Public Employees' Long-Term
             220      Disability Act.
             221          [(35)] (38) "Public funds" means those funds derived, either directly or indirectly, from
             222      public taxes or public revenue, dues or contributions paid or donated by the membership of the
             223      organization, used to finance an activity whose objective is to improve, on a nonprofit basis,
             224      the governmental, educational, and social programs and systems of the state or its political
             225      subdivisions.
             226          [(36)] (39) "Qualified defined contribution plan" means a defined contribution plan
             227      that meets the requirements of Section 401(k) or Section 403(b) of the Internal Revenue Code.
             228          (40) (a) "Reemployed," "reemploy," or "reemployment" means work or service
             229      performed after retirement, in exchange for compensation.
             230          (b) Reemployment includes work or service performed on a contract if the retiree is:
             231          (i) listed as the contractor; or
             232          (ii) an owner, partner, or principle of the contractor.
             233          [(37)] (41) "Refund interest" means the amount accrued on member contributions at a
             234      rate adopted by the board.
             235          [(38)] (42) "Retiree" means an individual who has qualified for an allowance under this
             236      title.
             237          [(39)] (43) "Retirement" means the status of an individual who has become eligible,
             238      applies for, and is entitled to receive an allowance under this title.
             239          [(40)] (44) "Retirement date" means the date selected by the member on which the
             240      member's retirement becomes effective with the office.
             241          [(41)] (45) "Service credit" means:
             242          (a) the period during which an employee is employed and compensated by a

             243      participating employer and meets the eligibility requirements for membership in a system or the
             244      Utah Governors' and Legislators' Retirement Plan, provided that any required contributions are
             245      paid to the office; and
             246          (b) periods of time otherwise purchasable under this title.
             247          [(42)] (46) "System" means the individual retirement systems created by Chapter 12,
             248      Public Employees' Contributory Retirement Act, Chapter 13, Public Employees'
             249      Noncontributory Retirement Act, Chapter 14, Public Safety Contributory Retirement Act,
             250      Chapter 15, Public Safety Noncontributory Retirement Act, Chapter 16, Firefighters'
             251      Retirement Act, Chapter 17, Judges' Contributory Retirement Act, Chapter 18, Judges'
             252      Noncontributory Retirement Act, and Chapter 19, Utah Governors' and Legislators' Retirement
             253      Act.
             254          (47) "Unfunded actuarial accrued liability" or "UAAL":
             255          (a) is determined by the system's actuary; and
             256          (b) means the excess, if any, of the accrued liability of a retirement system over the
             257      actuarial value of its assets.
             258          [(43)] (48) "Voluntary deferrals" means an amount contributed by a participant into
             259      that participant's defined contribution account.
             260          Section 2. Section 49-11-405 is amended to read:
             261           49-11-405. Service credit from different systems or plans -- Eligibility and
             262      calculation of service credit.
             263          (1) (a) A member who has service credit from two or more systems or one or more
             264      systems and the Utah Governors' and Legislators' Retirement Plan may combine service credit
             265      for purposes of determining eligibility for retirement.
             266          (b) The provisions of Subsection (1)(a) do not apply to concurrent service.
             267          (2) To be eligible for the calculation under Subsection (3), the member's service credit
             268      earned under the different systems or the Utah Governors' and Legislators' Retirement Plan
             269      shall at least equal the minimum amount of service credit required to retire from the system
             270      which most recently covered the member.
             271          (3) If a member meets the requirements of Subsection (2), the office shall calculate the
             272      member's allowance using all service credit earned from any system or the Utah Governors' and
             273      Legislators' Retirement Plan, with no actuarial reduction applied to the allowance, except the

             274      service credit used to calculate the benefit shall be increased or decreased to reflect the value of
             275      the assets transferred.
             276          (4) The office shall establish the standards used for calculating any increase or decrease
             277      in the service credit.
             278          (5) This section does not apply to a retiree who is subject to [Section] Sections
             279      49-11-504 and 49-11-505 .
             280          Section 3. Section 49-11-504 is amended to read:
             281           49-11-504. Reemployment of a retiree -- Restrictions.
             282          (1) As used in this section, "full-time" means:
             283          (a) employment requiring 20 or more hours of work per week; or
             284          (b) at least a half-time teaching contract.
             285          (2) (a) Except for the provisions of Subsection (3), the provisions of this section do not
             286      apply to a person who is subject to the provisions of Section 49-11-505 .
             287          (b) This section does not apply to elected positions.
             288          [(1)] (3) A person who [retires from a nonparticipating employer] is not a retiree under
             289      this title is not subject to any postretirement restrictions under this title.
             290          [(2) A retiree of an agency who returns to work at a different agency is not subject to
             291      any postretirement restrictions under this section and may not earn additional service credit.]
             292          [(3) For the purposes of Subsections (4) and (5), "full-time" employment means
             293      employment requiring 20 hours of work per week or more or at least a half-time teaching
             294      contract.]
             295          (4) A retiree of an agency who is reemployed may not earn additional service credit, if
             296      the retiree is reemployed by:
             297          (a) a different agency; or
             298          (b) the same agency after six months from the retirement date.
             299          [(4)] (5) A retiree of an agency who is reemployed on a full-time basis by the same
             300      agency within six months of the date of retirement is subject to the following:
             301          (a) the agency shall immediately notify the office;
             302          (b) the office shall cancel the retiree's allowance and reinstate the retiree to active
             303      member status;
             304          (c) the allowance cancellation and reinstatement to active member status is effective on

             305      the first day of the month following the date of reemployment;
             306          (d) the reinstated retiree may not retire again with a recalculated benefit for a two-year
             307      period from the date of cancellation of the original allowance, and if the retiree retires again
             308      within the two-year period, the original allowance shall be resumed; and
             309          (e) a reinstated retiree retiring after the two-year period shall be credited with the
             310      service credit in the retiree's account at the time of the first retirement and from that time shall
             311      be treated as a member of a system, including the accrual of additional service credit, but
             312      subject to recalculation of the allowance under Subsection (9) .
             313          [(5)] (6) A retiree of an agency who is reemployed by the same agency within six
             314      months of retirement on a less than full-time basis by the same agency is subject to the
             315      following:
             316          (a) the retiree may earn, without penalty, compensation from that position which is not
             317      in excess of the exempt earnings permitted by Social Security;
             318          (b) if a retiree receives compensation in a calendar year in excess of the Social Security
             319      limitation, 25% of the allowance shall be suspended for the remainder of the six-month period;
             320          (c) the effective date of a suspension and reinstatement of an allowance shall be set by
             321      the office; and
             322          (d) any suspension of a retiree's allowance under this Subsection [(5)] (6) shall be
             323      applied on a calendar year basis.
             324          [(6)] (7) For six months immediately following retirement, the retiree and participating
             325      employer who are subject to Subsection (6) shall:
             326          (a) maintain an accurate record of gross earnings in employment;
             327          (b) report the gross earnings at least monthly to the office;
             328          (c) immediately notify the office in writing of any postretirement earnings under
             329      Subsection [(4)] (6); and
             330          (d) immediately notify the office in writing whether postretirement earnings equal or
             331      exceed the exempt earnings under Subsection [(5)] (6).
             332          [(7) A retiree of an agency who is reemployed by the same agency after six months
             333      from the retirement date is not subject to any postretirement restrictions under this title and
             334      may not earn additional service credit.]
             335          (8) (a) If a participating employer hires a [nonexempt] retiree, on a full-time basis, who

             336      may not earn additional service credit under [this section] Subsection (4), the participating
             337      employer [shall contribute the same percentage of a retiree's salary that the participating
             338      employer would have been required to contribute if the retiree were an active member, up to
             339      the amount allowed by federal law] may not contribute an amount that exceeds the normal cost
             340      rate as defined under Section 49-11-102 to a plan for the retiree under Subsection (8)(b).
             341          (b) The contributions under Subsection (8)(a) are not required, but if paid, shall be paid
             342      to a retiree-designated:
             343          (i) qualified defined contribution plan administered by the board, if the participating
             344      employer participates in a qualified defined contribution plan administered by the board; or
             345          (ii) qualified defined contribution plan offered by the participating employer if the
             346      participating employer does not participate in a qualified defined contribution plan
             347      administered by the board.
             348          (c) Notwithstanding the provisions of Subsection (8)(b), if an employer is not
             349      participating in a qualified defined contribution plan administered by the board, the employer
             350      may elect to pay the contributions under Subsection (8)(a) to a nonqualified deferred
             351      compensation plan administered by the board.
             352          (9) [Notwithstanding any other provision of this section, a] A retiree who has returned
             353      to work, accrued additional service credit, and again retires shall have the retiree's allowance
             354      recalculated using:
             355          (a) the formula in effect at the date of the retiree's original retirement for all service
             356      credit accrued prior to that date; and
             357          (b) the formula in effect at the date of the subsequent retirement for all service credit
             358      accrued between the first and subsequent retirement dates.
             359          [(10) This section does not apply to elected positions.]
             360          [(11)] (10) The board may make rules to implement this section.
             361          Section 4. Section 49-11-505 is enacted to read:
             362          49-11-505. Reemployment of a retiree -- Restrictions.
             363          (1) For purposes of this section, "retiree":
             364          (a) means a person who:
             365          (i) retired from a participating employer; and
             366          (ii) begins reemployment on or after July 1, 2010 with a participating employer; and

             367          (b) does not include a retiree who is reemployed as an active senior judge appointed to
             368      hear cases by the Utah Supreme Court in accordance with Article VIII, Section 4, Utah
             369      Constitution.
             370          (2) A retiree may not for the same period of reemployment:
             371          (a) (i) earn additional service credit; or
             372          (ii) receive any retirement related contribution from a participating employer; and
             373          (b) receive a retirement allowance.
             374          (3) The office shall cancel the retirement allowance of a retiree if the reemployment
             375      with a participating employer begins within one year of the retiree's retirement date.
             376          (4) If a retiree is not subject to Subsection (3), the retiree may elect to:
             377          (a) earn additional service credit in accordance with this title and cancel the retiree's
             378      retirement allowance; or
             379          (b) continue to receive the retiree's retirement allowance and forfeit any retirement
             380      related contribution from the participating employer who reemployed the retiree.
             381          (5) If an employee makes an election under Subsection (4)(b) to continue to receive a
             382      retirement allowance while reemployed, the participating employer shall contribute to the
             383      office the amortization rate, as defined in Section 49-11-102, to be applied to the system that
             384      would have covered the retiree.
             385          (6) (a) A participating employer shall immediately notify the office:
             386          (i) if the participating employer reemploys a retiree;
             387          (ii) whether the remployment is subject to Subsection (3) or (4) of this section; and
             388          (iii) any election by the retiree under Subsection (4).
             389          (b) A participating employer is liable to the office for a payment or failure make a
             390      payment in violation of this section.
             391          (c) If a participating employer fails to notify the office in accordance with this section,
             392      the participating employer is immediately subject to a compliance audit by the office.
             393          (7) (a) The office shall immediately cancel the retirement allowance of a retiree in
             394      accordance with Subsection (7)(b) if the office receives notice or learns of:
             395          (i) the reemployment of a retiree subject to Subsection (3); or
             396          (ii) the election of a reemployed retiree under Subsection (4)(a).
             397          (b) The office shall cancel the allowance of a retiree subject to Subsection (7)(a), and

             398      reinstate the retiree to active member status on the first day of the month following the date of:
             399          (i) reemployment if the retiree is subject to Subsection (3); or
             400          (ii) an election by an employee under Subsection (4)(a).
             401          (8) (a) A retiree subject to Subsection (7)(b) who retires within two years from the date
             402      of reemployment:
             403          (i) is not entitled to a recalculated retirement benefit; and
             404          (ii) will resume the allowance that was being paid at the time of cancellation.
             405          (b) Subject to Subsection (2), a retiree who is re-instated to active membership under
             406      Subsection (7) and who retires two or more years after the date of re-instatement to active
             407      membership shall:
             408          (i) resume receiving the allowance that was being paid at the time of cancellation; and
             409          (ii) receive an additional allowance based on the formula in effect at the date of the
             410      subsequent retirement for all service credit accrued between the first and subsequent retirement
             411      dates.
             412          (9) A retiree subject to this section shall report to the office the status of the
             413      reemployment under Subsection (3) or (4).
             414          (10) The board may make rules to implement this section.
             415          Section 5. Section 49-12-701 is amended to read:
             416           49-12-701. Early retirement incentive -- Eligibility -- Calculation of benefit --
             417      Payment of costs -- Savings to be appropriated by Legislature -- Restrictions on
             418      reemployment.
             419          (1) Any member of this system may retire and receive the allowance allowed under
             420      Subsection (2) if the member meets the following requirements as of the member's retirement
             421      date:
             422          (a) the member is eligible for retirement under Section 49-12-401 , or has 25 years of
             423      service credit;
             424          (b) the member elects to forfeit any stipend for retirement offered by the participating
             425      employer; and
             426          (c) the member elects to retire from this system by applying for retirement by the date
             427      established under Subsection (3)(a) or (3)(b).
             428          (2) (a) A member who retires under Subsection (1) shall receive 2% of that member's

             429      final average salary for all years of service credit.
             430          (b) An actuarial reduction may not be applied to the allowance granted under this
             431      section.
             432          (3) In order to receive the allowance allowed by this section, a member shall submit an
             433      application to the office as follows:
             434          (a) (i) For state and school employees under Level A, the application shall be filed by
             435      May 31, 1987. The member's retirement date shall then be set by the member on the 1st or 16th
             436      day of July, August, or September, 1987.
             437          (ii) If a Level A member elects to retire, the executive director or participating
             438      employer may request the member to delay the retirement date until a later date, but no later
             439      than June 30, 1988.
             440          (iii) If the member agrees to delay the retirement date, the retirement date shall be
             441      delayed, but service credit may not be accrued after the member's original retirement date
             442      elected by the member, and compensation earned after the member's original retirement date
             443      may not be used in the calculation of the final average salary for determining the retirement
             444      allowance.
             445          (b) (i) For political subdivision employees under Level B, the application shall be filed
             446      by September 30, 1987.
             447          (ii) The retirement date shall then be set by the member on the 1st or 16th day of July,
             448      August, September, October, November, or December, 1987.
             449          (4) (a) The cost of providing the allowance under this section shall be funded in fiscal
             450      year 1987-88 by a supplemental appropriation in the 1988 General Session based on the
             451      retirement contribution rate increase established by the consulting actuary and approved by the
             452      board.
             453          (b) The cost of providing the allowance under this section shall be funded beginning
             454      July 1, 1988, by means of an increase in the retirement contribution rate established by the
             455      consulting actuary and approved by the board.
             456          (c) The rate increase under Subsections (4)(a) and (b) shall be funded:
             457          (i) for state employees, by an appropriation from the account established by the
             458      Division of Finance under Subsection (4)(d), which is funded by savings derived from this
             459      early retirement incentive and a work force reduction;

             460          (ii) for school employees, by direct contributions from the employing unit, which may
             461      not be funded through an increase in the retirement contribution amount established in Title
             462      53A, Chapter 17a, Minimum School Program Act; and
             463          (iii) for political subdivisions under Level B, by direct contributions by the
             464      participating employer.
             465          (d) (i) Each year, any excess savings derived from this early retirement incentive which
             466      are above the costs of funding the increase and the costs of paying insurance, sick leave,
             467      compensatory leave, and vacation leave under Subsections (4)(c)(i) and (c)(ii) shall be reported
             468      to the Legislature and shall be appropriated as provided by law.
             469          (ii) In the case of Subsection (4)(c)(i), the Division of Finance shall establish an
             470      account into which all savings derived from this early retirement incentive shall be deposited as
             471      the savings are realized.
             472          (iii) In the case of Subsection (4)(c)(ii), the State Office of Education shall certify the
             473      amount of savings derived from this early retirement incentive.
             474          (iv) The State Office of Education and the participating employer may not spend the
             475      savings until appropriated by the Legislature as provided by law.
             476          (5) A member who retires under this section is subject to [Section] Sections 49-11-504
             477      and 49-11-505 .
             478          (6) The board may adopt rules to administer this section.
             479          (7) The Legislative Auditor General shall perform an audit to ensure compliance with
             480      this section.
             481          Section 6. Section 49-13-701 is amended to read:
             482           49-13-701. Early retirement incentive -- Eligibility -- Calculation of benefit --
             483      Payment of costs -- Savings to be appropriated by Legislature -- Restrictions on
             484      reemployment.
             485          (1) Any member of this system may retire and receive the allowance allowed under
             486      Subsection (2) if the member meets the following requirements as of the member's retirement:
             487          (a) the member is eligible for retirement under Section 49-13-401 , or has 25 years of
             488      service credit;
             489          (b) the member elects to forfeit any stipend for retirement offered by the participating
             490      employer; and

             491          (c) the member elects to retire from this system by applying for retirement by the date
             492      established under Subsection (3)(a) or (3)(b).
             493          (2) (a) A member who retires under Subsection (1) shall receive 2% of that member's
             494      final average salary for all years of service credit.
             495          (b) No actuarial reduction may be applied to the allowance granted under this section.
             496          (3) In order to receive the allowance allowed by this section, a member shall submit an
             497      application to the office as follows:
             498          (a) (i) For state and school employees under Level A, the application shall be filed by
             499      May 31, 1987. The member's retirement date shall then be set by the member on the 1st or 16th
             500      day of July, August, or September, 1987.
             501          (ii) If a Level A member elects to retire, the executive director or participating
             502      employer may request the member to delay the retirement date until a later date, but no later
             503      than June 30, 1988.
             504          (iii) If the member agrees to delay the retirement date, the retirement date shall be
             505      delayed, but service credit may not be accrued after the member's original retirement date
             506      elected by the member, and compensation earned after the member's original retirement date
             507      may not be used in the calculation of the final average salary for determining the retirement
             508      allowance.
             509          (b) (i) For political subdivision employees under Level B, the application shall be filed
             510      by September 30, 1987.
             511          (ii) The member's retirement date shall then be set by the member on the 1st or 16th
             512      day of July, August, September, October, November, or December, 1987.
             513          (4) (a) The cost of providing the allowance under this section shall be funded in fiscal
             514      year 1987-88 by a supplemental appropriation in the 1988 General Session based on the
             515      retirement contribution rate increase established by the consulting actuary and approved by the
             516      board.
             517          (b) The cost of providing the allowance under this section shall be funded beginning
             518      July 1, 1988, by means of an increase in the retirement contribution rate established by the
             519      consulting actuary and approved by the board.
             520          (c) The rate increase under Subsections (4)(a) and (b) shall be funded:
             521          (i) for state employees, by an appropriation from the account established by the

             522      Division of Finance under Subsection (4)(d), which is funded by savings derived from this
             523      early retirement incentive and a work force reduction;
             524          (ii) for school employees, by direct contributions from the employing unit, which may
             525      not be funded through an increase in the retirement contribution amount established in Title
             526      53A, Chapter 17a, Minimum School Program Act; and
             527          (iii) for political subdivisions under Level B, by direct contributions by the
             528      participating employer.
             529          (d) (i) Each year, any excess savings derived from this early retirement incentive which
             530      are above the costs of funding the increase and the costs of paying insurance, sick leave,
             531      compensatory leave, and vacation leave under Subsections (4)(c)(i) and (c)(ii) shall be reported
             532      to the Legislature and shall be appropriated as provided by law.
             533          (ii) In the case of Subsection (4)(c)(i), the Division of Finance shall establish an
             534      account into which all savings derived from this early retirement incentive shall be deposited as
             535      the savings are realized.
             536          (iii) In the case of Subsection (4)(c)(ii), the State Office of Education shall certify the
             537      amount of savings derived from this early retirement incentive.
             538          (iv) The State Office of Education and the participating employer may not spend the
             539      savings until appropriated by the Legislature as provided by law.
             540          (5) A member who retires under this section is subject to [Section] Sections 49-11-504
             541      and 49-11-505 .
             542          (6) The board may make rules to administer this section.
             543          (7) The Legislative Auditor General shall perform an audit to ensure compliance with
             544      this section.
             545          Section 7. Section 49-14-203 is amended to read:
             546           49-14-203. Exemption of certain employees from coverage.
             547          (1) A public safety service employee serving as the Commissioner of Public Safety, or
             548      as the elected or appointed sheriff or chief of police of a public safety organization, is excluded
             549      from coverage under this system if that public safety service employee files a formal written
             550      request seeking exemption.
             551          (2) Except as provided in Subsection (3), the public safety service employee may not
             552      continue employment with the same participating employer and receive an allowance from the

             553      office based on public safety service at the same time.
             554          (3) (a) The Commissioner of Public Safety or an elected sheriff who is eligible to retire
             555      under Section 49-14-401 may until July 1, 2010:
             556          [(a)] (i) retire from this system and receive an allowance;
             557          [(b)] (ii) continue in the elected or appointed position; and
             558          [(c)] (iii) file for the exemption under Subsection (1).
             559          (b) A person who makes an election under Subsection (3)(a) may continue under the
             560      terms of the election.
             561          Section 8. Section 49-14-402 is amended to read:
             562           49-14-402. Calculation of retirement allowance.
             563          (1) A retiree under this system shall receive an allowance equal to:
             564          (a) 2.5% of final average monthly salary multiplied by the number of years of service
             565      credit, limited to 20 years; plus
             566          (b) 2% of final average monthly salary, multiplied by the number of years of service
             567      credit in excess of 20 years.
             568          (2) (a) Except as modified by cost-of-living adjustments and except as provided under
             569      Subsection (2)(b), an allowance under this system may not exceed 70% of a retiree's final
             570      average monthly salary.
             571          (b) The allowance limitation under Subsection (2)(a) does not apply to a member who
             572      initially retires on or after July 1, 2010.
             573          Section 9. Section 49-15-203 is amended to read:
             574           49-15-203. Exemption of certain employees from coverage.
             575          (1) A public safety service employee serving as the Commissioner of Public Safety, or
             576      as the elected or appointed sheriff or chief of police of a public safety organization, is excluded
             577      from coverage under this system if that public safety service employee files a formal written
             578      request seeking exemption.
             579          (2) Except as provided in Subsection (3), the public safety service employee may not
             580      continue employment with the same participating employer and receive an allowance from the
             581      office based on public safety service at the same time.
             582          (3) (a) The Commissioner of Public Safety, an elected sheriff, or an appointed chief of
             583      police who is eligible to retire under Section 49-15-401 may until July 1, 2010:

             584          [(a)] (i) retire from this system and receive an allowance;
             585          [(b)] (ii) continue in the elected or appointed position; and
             586          [(c)] (iii) file for the exemption under Subsection (1).
             587          (b) A person who makes an election under Subsection (3)(a) may continue under the
             588      terms of the election.
             589          Section 10. Section 49-15-402 is amended to read:
             590           49-15-402. Calculation of retirement benefit.
             591          (1) A retiree under this system shall receive an allowance equal to:
             592          (a) 2.5% of final average monthly salary multiplied by the number of years of service
             593      credit, limited to 20 years; plus
             594          (b) 2% of final average monthly salary, multiplied by the number of years of service
             595      credit in excess of 20 years.
             596          (2) (a) Except as modified by cost-of-living adjustments and except as provided under
             597      Subsection (2)(b), an allowance under this system may not exceed 70% of a retiree's final
             598      average monthly salary.
             599          (b) The allowance limitation under Subsection (2)(a) does not apply to a member who
             600      initially retires on or after July 1, 2010.
             601          Section 11. Section 49-16-203 is amended to read:
             602           49-16-203. Exemption of certain employees from coverage -- Exception.
             603          (1) A firefighter service employee serving as the chief of any fire department or district
             604      is excluded from coverage under this system if that firefighter service employee files a formal
             605      written request seeking exemption.
             606          (2) The chief of any fire department or district who retires from that position shall
             607      comply with the provisions of [Section] Sections 49-11-504 and 49-11-505 upon
             608      reemployment by the participating employer.
             609          Section 12. Section 49-16-402 is amended to read:
             610           49-16-402. Calculation of retirement allowance.
             611          (1) A retiree under this system shall receive an allowance equal to:
             612          (a) 2.5% of final average monthly salary multiplied by the number of years of service
             613      credit, limited to 20 years; plus
             614          (b) 2% of final average monthly salary, multiplied by the number of years of service

             615      credit in excess of 20 years.
             616          (2) The minimum allowance payable under this section is $500.
             617          (3) (a) Except as modified by cost-of-living adjustments and except as provided under
             618      Subsection (3)(b), an allowance under this system may not exceed 70% of a firefighter service
             619      employee's final average monthly salary.
             620          (b) The allowance limitation under Subsection (3)(a) does not apply to a member who
             621      initially retires on or after July 1, 2010.
             622          Section 13. Section 49-17-402 is amended to read:
             623           49-17-402. Calculation of retirement allowance.
             624          (1) A retiree under this system shall receive an allowance equal to:
             625          (a) 5% of the final average monthly salary multiplied by the number of years of service
             626      credit, limited to 10 years; plus
             627          (b) 2.25% of the final average monthly salary multiplied by the number of years of
             628      service credit in excess of 10 years and up to and including 20 years; plus
             629          (c) 1% of the final average monthly salary multiplied by the number of years of service
             630      credit in excess of 20 years.
             631          (2) (a) Except as modified by cost-of-living adjustments and except as provided under
             632      Subsection (2)(b), an allowance under this system may not exceed 75% of the member's final
             633      average monthly salary.
             634          (b) The allowance limitation under Subsection (2)(a) does not apply to a member who
             635      initially retires on or after July 1, 2010.
             636          (3) If the retiree has attained the age of 55 years and has 20 years or more of service
             637      credit, the retiree shall receive an early retirement reduction to the allowance based on an
             638      actuarial calculation assuming a normal retirement age of 65 years.
             639          Section 14. Section 49-18-402 is amended to read:
             640           49-18-402. Calculation of retirement allowance.
             641          (1) A retiree under this system shall receive an allowance equal to:
             642          (a) 5% of the final average monthly salary multiplied by the number of years of service
             643      credit, limited to 10 years; plus
             644          (b) 2.25% of the final average monthly salary multiplied by the number of years of
             645      service credit in excess of 10 years and up to and including 20 years; plus

             646          (c) 1% of the final average monthly salary multiplied by the number of years of service
             647      credit in excess of 20 years.
             648          (2) (a) Except as modified by cost-of-living adjustments and except as provided under
             649      Subsection (2)(b), an allowance under this system may not exceed 75% of the member's final
             650      average monthly salary.
             651          (b) The allowance limitation under Subsection (2)(a) does not apply to a member who
             652      initially retires on or after July 1, 2010.
             653          (3) If the retiree has attained the age of 55 years and has 20 years or more of service
             654      credit, the retiree shall receive an early retirement reduction to the allowance based on an
             655      actuarial calculation assuming a normal retirement age of 65 years.
             656          Section 15. Effective date.
             657          This bill takes effect on July 1, 2010.

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