H.B. 426

             1     

RETIREMENT PARTICIPATION MODIFICATIONS

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Don L. Ipson

             5     
Senate Sponsor: J. Stuart Adams

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Utah State Retirement and Insurance Benefit Act by providing for
             10      the withdrawal of employees of a withdrawing entity.
             11      Highlighted Provisions:
             12          This bill:
             13          .    defines "withdrawing entity";
             14          .    allows a withdrawing entity to make an election of continued participation or
             15      withdrawal in a Utah retirement system or plan for future employees beginning on a
             16      date, no later than January 1, 2015, determined by the withdrawing entity;
             17          .    requires the withdrawing entity to pay any costs that arise out of the election of
             18      nonparticipation;
             19          .    provides for rulemaking by the Utah State Retirement Board;
             20          .    excludes new employees of a withdrawing entity from participation in the Public
             21      Employees' Contributory Retirement System, the Public Employees'
             22      Noncontributory Retirement System, and the New Public Employees' Tier II
             23      Contributory Retirement Act under certain circumstances; and
             24          .    makes technical changes.
             25      Money Appropriated in this Bill:
             26          None
             27      Other Special Clauses:


             28          None
             29      Utah Code Sections Affected:
             30      AMENDS:
             31           49-12-203 , as last amended by Laws of Utah 2013, Chapters 310 and 316
             32           49-13-203 , as last amended by Laws of Utah 2013, Chapters 310 and 316
             33           49-22-203 , as last amended by Laws of Utah 2013, Chapter 316
             34      ENACTS:
             35           49-11-623 , Utah Code Annotated 1953
             36     
             37      Be it enacted by the Legislature of the state of Utah:
             38          Section 1. Section 49-11-623 is enacted to read:
             39          49-11-623. Withdrawing entity -- Participation election date -- Withdrawal costs
             40      -- Rulemaking.
             41          (1) As used in this section, "withdrawing entity" means an entity that:
             42          (a) participates in a system or plan under this title prior to July 1, 2014;
             43          (b) provides mental health and substance abuse services for a county under Section
             44      17-50-318 ; and
             45          (c) after beginning participation with a system or plan under this title, has modified its
             46      federal tax status to a nonprofit organization that qualifies under Section 501(c)(3) of the
             47      Internal Revenue Code.
             48          (2) Notwithstanding any other provision of this title, a withdrawing entity may provide
             49      for the participation of its employees with that system or plan as follows:
             50          (a) the withdrawing entity shall determine a date that is no later than January 1, 2015,
             51      on which the withdrawing entity shall make an election under Subsection (3); and
             52          (b) the withdrawing entity shall pay to the office any actuarial and administrative costs
             53      determined by the office to have arisen out of an election made under this section.
             54          (3) The withdrawing entity described under Subsection (2) may elect to:
             55          (a) continue its participation for all current employees of the withdrawing entity, who
             56      are covered by a system or plan as of the date set under Subsection (2)(a); and
             57          (b) withdraw from participation in all systems or plans for all persons initially entering
             58      employment with the withdrawing entity, beginning on the date set under Subsection (2)(a).


             59          (4) (a) An election provided under Subsection (3):
             60          (i) is a one-time election made no later than the date specified under Subsection (2)(a);
             61          (ii) shall be documented by a resolution adopted by the governing body of the
             62      withdrawing entity;
             63          (iii) is irrevocable; and
             64          (iv) applies to the withdrawing entity as the employer and to all employees of the
             65      withdrawing entity.
             66          (b) Notwithstanding an election made under Subsection (3), any eligibility for service
             67      credit earned by an employee under this title before the date specified under Subsection (2)(a)
             68      is not affected by this section.
             69          (5) If a withdrawing entity elects to continue participation under Subsection (3), the
             70      withdrawing entity shall continue to be subject to the laws and the rules governing the system
             71      or plan in which an employee participates, including the accrual of service credit and payment
             72      of contributions.
             73          (6) The board shall make rules to implement this section.
             74          Section 2. Section 49-12-203 is amended to read:
             75           49-12-203. Exclusions from membership in system.
             76          (1) The following employees are not eligible for service credit in this system:
             77          (a) subject to the requirements of Subsection (2), an employee whose employment
             78      status is temporary in nature due to the nature or the type of work to be performed;
             79          (b) except as provided under Subsection (3)(a), an employee of an institution of higher
             80      education who participates in a retirement system with the Teachers' Insurance and Annuity
             81      Association of America or with any other public or private retirement system, organization, or
             82      company during any period in which required contributions based on compensation have been
             83      paid on behalf of the employee by the employer;
             84          (c) an employee serving as an exchange employee from outside the state;
             85          (d) an executive department head of the state, a member of the State Tax Commission,
             86      the Public Service Commission, and a member of a full-time or part-time board or commission
             87      who files a formal request for exemption;
             88          (e) an employee of the Department of Workforce Services who is covered under
             89      another retirement system allowed under Title 35A, Chapter 4, Employment Security Act; [or]


             90          (f) an employee who is employed on or after July 1, 2009 with an employer that has
             91      elected, prior to July 1, 2009, to be excluded from participation in this system under Subsection
             92      49-12-202 (2)(c)[.]; or
             93          (g) an employee who is employed with a withdrawing entity that has elected, prior to
             94      January 1, 2015, to exclude new employees from participation in this system under Subsection
             95      49-11-623 (3).
             96          (2) If an employee whose status is temporary in nature due to the nature of type of
             97      work to be performed:
             98          (a) is employed for a term that exceeds six months and the employee otherwise
             99      qualifies for service credit in this system, the participating employer shall report and certify to
             100      the office that the employee is a regular full-time employee effective the beginning of the
             101      seventh month of employment; or
             102          (b) was previously terminated prior to being eligible for service credit in this system
             103      and is reemployed within three months of termination by the same participating employer, the
             104      participating employer shall report and certify that the member is a regular full-time employee
             105      when the total of the periods of employment equals six months and the employee otherwise
             106      qualifies for service credits in this system.
             107          (3) (a) Upon cessation of the participating employer contributions, an employee under
             108      Subsection (1)(b) is eligible for service credit in this system.
             109          (b) Notwithstanding the provisions of Subsection (1)(f), any eligibility for service
             110      credit earned by an employee under this chapter before July 1, 2009 is not affected under
             111      Subsection (1)(f).
             112          (4) Upon filing a written request for exemption with the office, the following
             113      employees shall be exempt from coverage under this system:
             114          (a) a full-time student or the spouse of a full-time student and individuals employed in
             115      a trainee relationship;
             116          (b) an elected official;
             117          (c) an executive department head of the state, a member of the State Tax Commission,
             118      a member of the Public Service Commission, and a member of a full-time or part-time board or
             119      commission;
             120          (d) an employee of the Governor's Office of Management and Budget;


             121          (e) an employee of the Governor's Office of Economic Development;
             122          (f) an employee of the Commission on Criminal and Juvenile Justice;
             123          (g) an employee of the Governor's Office;
             124          (h) an employee of the State Auditor's Office;
             125          (i) an employee of the State Treasurer's Office;
             126          (j) any other member who is permitted to make an election under Section 49-11-406 ;
             127          (k) a person appointed as a city manager or chief city administrator or another person
             128      employed by a municipality, county, or other political subdivision, who is an at-will employee;
             129      and
             130          (l) an employee of an interlocal cooperative agency created under Title 11, Chapter 13,
             131      Interlocal Cooperation Act, who is engaged in a specialized trade customarily provided through
             132      membership in a labor organization that provides retirement benefits to its members.
             133          (5) (a) Each participating employer shall prepare a list designating those positions
             134      eligible for exemption under Subsection (4).
             135          (b) An employee may not be exempted unless the employee is employed in a position
             136      designated by the participating employer.
             137          (6) (a) In accordance with this section, a municipality, county, or political subdivision
             138      may not exempt more than 50 positions or a number equal to 10% of the employees of the
             139      municipality, county, or political subdivision whichever is lesser.
             140          (b) A municipality, county, or political subdivision may exempt at least one regular
             141      full-time employee.
             142          (7) Each participating employer shall:
             143          (a) file employee exemptions annually with the office; and
             144          (b) update the employee exemptions in the event of any change.
             145          (8) The office may make rules to implement this section.
             146          Section 3. Section 49-13-203 is amended to read:
             147           49-13-203. Exclusions from membership in system.
             148          (1) The following employees are not eligible for service credit in this system:
             149          (a) subject to the requirements of Subsection (2), an employee whose employment
             150      status is temporary in nature due to the nature or the type of work to be performed;
             151          (b) except as provided under Subsection (3)(a), an employee of an institution of higher


             152      education who participates in a retirement system with the Teachers' Insurance and Annuity
             153      Association of America or with any other public or private retirement system, organization, or
             154      company during any period in which required contributions based on compensation have been
             155      paid on behalf of the employee by the employer;
             156          (c) an employee serving as an exchange employee from outside the state;
             157          (d) an executive department head of the state or a legislative director, senior executive
             158      employed by the governor's office, a member of the State Tax Commission, a member of the
             159      Public Service Commission, and a member of a full-time or part-time board or commission
             160      who files a formal request for exemption;
             161          (e) an employee of the Department of Workforce Services who is covered under
             162      another retirement system allowed under Title 35A, Chapter 4, Employment Security Act; [or]
             163          (f) an employee who is employed with an employer that has elected to be excluded
             164      from participation in this system under Subsection 49-13-202 (5), effective on or after the date
             165      of the employer's election under Subsection 49-13-202 (5)[.]; or
             166          (g) an employee who is employed with a withdrawing entity that has elected, prior to
             167      January 1, 2015, to exclude new employees from participation in this system under Subsection
             168      49-11-623 (3).
             169          (2) If an employee whose status is temporary in nature due to the nature of type of
             170      work to be performed:
             171          (a) is employed for a term that exceeds six months and the employee otherwise
             172      qualifies for service credit in this system, the participating employer shall report and certify to
             173      the office that the employee is a regular full-time employee effective the beginning of the
             174      seventh month of employment; or
             175          (b) was previously terminated prior to being eligible for service credit in this system
             176      and is reemployed within three months of termination by the same participating employer, the
             177      participating employer shall report and certify that the member is a regular full-time employee
             178      when the total of the periods of employment equals six months and the employee otherwise
             179      qualifies for service credits in this system.
             180          (3) (a) Upon cessation of the participating employer contributions, an employee under
             181      Subsection (1)(b) is eligible for service credit in this system.
             182          (b) Notwithstanding the provisions of Subsection (1)(f), any eligibility for service


             183      credit earned by an employee under this chapter before the date of the election under
             184      Subsection 49-13-202 (5) is not affected under Subsection (1)(f).
             185          (4) Upon filing a written request for exemption with the office, the following
             186      employees shall be exempt from coverage under this system:
             187          (a) a full-time student or the spouse of a full-time student and individuals employed in
             188      a trainee relationship;
             189          (b) an elected official;
             190          (c) an executive department head of the state, a member of the State Tax Commission,
             191      a member of the Public Service Commission, and a member of a full-time or part-time board or
             192      commission;
             193          (d) an employee of the Governor's Office of Management and Budget;
             194          (e) an employee of the Governor's Office of Economic Development;
             195          (f) an employee of the Commission on Criminal and Juvenile Justice;
             196          (g) an employee of the Governor's Office;
             197          (h) an employee of the State Auditor's Office;
             198          (i) an employee of the State Treasurer's Office;
             199          (j) any other member who is permitted to make an election under Section 49-11-406 ;
             200          (k) a person appointed as a city manager or chief city administrator or another person
             201      employed by a municipality, county, or other political subdivision, who is an at-will employee;
             202          (l) an employee of an interlocal cooperative agency created under Title 11, Chapter 13,
             203      Interlocal Cooperation Act, who is engaged in a specialized trade customarily provided through
             204      membership in a labor organization that provides retirement benefits to its members; and
             205          (m) an employee of the Utah Science Technology and Research Initiative created under
             206      Title 63M, Chapter 2, Utah Science Technology and Research Governing Authority Act.
             207          (5) (a) Each participating employer shall prepare a list designating those positions
             208      eligible for exemption under Subsection (4).
             209          (b) An employee may not be exempted unless the employee is employed in a position
             210      designated by the participating employer.
             211          (6) (a) In accordance with this section, a municipality, county, or political subdivision
             212      may not exempt more than 50 positions or a number equal to 10% of the employees of the
             213      municipality, county, or political subdivision, whichever is lesser.


             214          (b) A municipality, county, or political subdivision may exempt at least one regular
             215      full-time employee.
             216          (7) Each participating employer shall:
             217          (a) file employee exemptions annually with the office; and
             218          (b) update the employee exemptions in the event of any change.
             219          (8) The office may make rules to implement this section.
             220          Section 4. Section 49-22-203 is amended to read:
             221           49-22-203. Exclusions from membership in system.
             222          (1) The following employees are not eligible for service credit in this system:
             223          (a) subject to the requirements of Subsection (2), an employee whose employment
             224      status is temporary in nature due to the nature or the type of work to be performed;
             225          (b) except as provided under Subsection (3), an employee of an institution of higher
             226      education who participates in a retirement system with the Teachers' Insurance and Annuity
             227      Association of America or with any other public or private retirement system, organization, or
             228      company during any period in which required contributions based on compensation have been
             229      paid on behalf of the employee by the employer;
             230          (c) an employee serving as an exchange employee from outside the state; [or]
             231          (d) an employee of the Department of Workforce Services who is covered under
             232      another retirement system allowed under Title 35A, Chapter 4, Employment Security Act[.]; or
             233          (e) an employee who is employed with a withdrawing entity that has elected, prior to
             234      January 1, 2015, to exclude new employees from participation in this system under Subsection
             235      49-11-623 (3).
             236          (2) If an employee whose status is temporary in nature due to the nature of type of
             237      work to be performed:
             238          (a) is employed for a term that exceeds six months and the employee otherwise
             239      qualifies for service credit in this system, the participating employer shall report and certify to
             240      the office that the employee is a regular full-time employee effective the beginning of the
             241      seventh month of employment; or
             242          (b) was previously terminated prior to being eligible for service credit in this system
             243      and is reemployed within three months of termination by the same participating employer, the
             244      participating employer shall report and certify that the member is a regular full-time employee


             245      when the total of the periods of employment equals six months and the employee otherwise
             246      qualifies for service credits in this system.
             247          (3) Upon cessation of the participating employer contributions, an employee under
             248      Subsection (1)(b) is eligible for service credit in this system.




Legislative Review Note
    as of 2-26-14 3:01 PM


Office of Legislative Research and General Counsel


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