First Substitute S.B. 269

Senator Deidre M. Henderson proposes the following substitute bill:


             1     
ANNUAL LEAVE PROGRAM II FOR STATE EMPLOYEES

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Deidre M. Henderson

             5     
House Sponsor: Steve Eliason

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Utah State Personnel Management Act by amending provisions
             10      for employee leave programs and creates the State Employees' Annual Leave Program
             11      II Trust Fund Act.
             12      Highlighted Provisions:
             13          This bill:
             14          .    defines "annual leave II" and "change date";
             15          .    provides that beginning on a date established by the Division of Finance that is no
             16      later than January 2, 2016, a state agency will offer annual leave II in lieu of annual
             17      leave to eligible state employees;
             18          .    provides that any unused annual leave accrued before a change date established by
             19      the Division of Finance that is no later than January 2, 2016, may be used under the
             20      same rules that applied to the leave on the change date;
             21          .    requires a state agency to set aside the cost of each hour of annual leave II for each
             22      eligible employee for deposit into the State Employees' Annual Leave Program II
             23      Trust Fund;
             24          .    provides for rulemaking authority; and
             25          .    enacts the State Employees' Annual Leave Program II Trust Fund Act, which creates


             26      the State Employees' Annual Leave Program II Trust Fund and board and provides for
             27      administration of the trust fund.
             28      Money Appropriated in this Bill:
             29          None
             30      Other Special Clauses:
             31          None
             32      Utah Code Sections Affected:
             33      ENACTS:
             34           67-19-14.6 , Utah Code Annotated 1953
             35           67-19f-101 , Utah Code Annotated 1953
             36           67-19f-102 , Utah Code Annotated 1953
             37           67-19f-201 , Utah Code Annotated 1953
             38           67-19f-202 , Utah Code Annotated 1953
             39           67-19f-301 , Utah Code Annotated 1953
             40           67-19f-302 , Utah Code Annotated 1953
             41     
             42      Be it enacted by the Legislature of the state of Utah:
             43          Section 1. Section 67-19-14.6 is enacted to read:
             44          67-19-14.6. Annual leave -- Definition -- Previously accrued hours -- Recognition
             45      of liability.
             46          (1) As used in this section:
             47          (a) (i) "Annual leave II" means leave hours an employing agency provides to an
             48      employee, beginning on the change date established in Subsection (2), as time off from work
             49      for personal use without affecting the employee's pay.
             50          (ii) "Annual leave II" does not include:
             51          (A) legal holidays under Section 63G-1-301 ;
             52          (B) time off as compensation for actual time worked in excess of an employee's
             53      defined work period;
             54          (C) sick leave;
             55          (D) paid or unpaid administrative leave; or
             56          (E) other paid or unpaid leave from work provided by state statute, administrative rule,


             57      or by federal law or regulation.
             58          (b) "Change date" means the date established by the Division of Finance under
             59      Subsection (2) when annual leave II begins for a state agency.
             60          (2) In accordance with the Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
             61      the Division of Finance shall establish a date that is no later than January 2, 2016, when a state
             62      agency shall offer annual leave II in lieu of annual leave to an employee who is eligible to
             63      receive paid leave.
             64          (3) An employing agency shall allow an employee who has an unused balance of
             65      accrued annual leave before the change date, to use the annual leave under the same rules that
             66      applied to the leave on the change date.
             67          (4) (a) At the time of employee accrual of annual leave II, an employing agency shall
             68      set aside the cost of each hour of annual leave II for each eligible employee in an amount
             69      determined in accordance with rules made by the Division of Finance.
             70          (b) The rules made under Subsection (4)(a) shall consider:
             71          (i) the employee hourly rate of pay;
             72          (ii) applicable employer paid taxes that would be required if the employee was paid for
             73      the annual leave II instead of using it for time off;
             74          (iii) other applicable employer paid benefits; and
             75          (iv) adjustments due to employee hourly rate changes, including the effect on accrued
             76      annual leave II balances.
             77          (5) The cost set aside under Subsection (4) shall be deposited by the Division of
             78      Finance into the State Employees' Annual Leave Program II Trust Fund created in Section
             79      67-19f-201 .
             80          (6) For annual leave hours accrued before the change date, an employing agency shall
             81      continue to comply with the Division of Finance requirements for contributions to the
             82      termination pool.
             83          (7) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act:
             84          (a) the department shall make rules for the accrual and use of annual leave II provided
             85      under this section; and
             86          (b) the Division of Finance shall make rules for the set aside provisions under
             87      Subsections (4) and (5).


             88          Section 2. Section 67-19f-101 is enacted to read:
             89     
Part 1. State Employees' Annual Leave Program II Trust Fund Act

             90          67-19f-101. Title.
             91          This chapter is known as the "State Employees' Annual Leave Program II Trust Fund
             92      Act."
             93          Section 3. Section 67-19f-102 is enacted to read:
             94          67-19f-102. Definitions.
             95          As used in this chapter:
             96          (1) "Annual leave II" is as defined in Section 67-19-14.6 .
             97          (2) "Board of trustees" or "board" means the board of trustees created in Section
             98      67-19f-202 .
             99          (3) "Income" means the revenues received by the state treasurer from investments of
             100      the trust fund principal.
             101          (4) "Trust fund" means the State Employees' Annual Leave Program II Trust Fund
             102      created in Section 67-19f-201 .
             103          Section 4. Section 67-19f-201 is enacted to read:
             104     
Part 2. State Employees' Annual Leave Program II Trust Fund

             105          67-19f-201. Trust fund -- Creation -- Oversight -- Dissolution.
             106          (1) There is created a trust fund entitled the "State Employees' Annual Leave Program
             107      II Trust Fund."
             108          (2) The trust fund consists of:
             109          (a) ongoing revenue provided from a state agency set aside for accrued annual leave II
             110      required under Section 67-19-14.6 ;
             111          (b) appropriations made to the trust fund by the Legislature, if any;
             112          (c) income; and
             113          (d) revenue received from other sources.
             114          (3) The Division of Finance shall account for the receipt and expenditures of trust fund
             115      money.
             116          (4) (a) The state treasurer shall invest trust fund money by following the procedures
             117      and requirements of Part 3, Investment of Trust Funds.
             118          (b) (i) The trust fund shall earn interest.


             119          (ii) The state treasurer shall deposit all interest or other income earned from investment
             120      of the trust fund back into the trust fund.
             121          (5) The board of trustees created in Section 67-19f-202 may expend money from the
             122      trust fund for:
             123          (a) reimbursement to the employer of the costs paid to the trust fund in accordance
             124      with Section 67-19-14.6 as annual leave II is used by an employee; and
             125          (b) reasonable administrative costs that the board of trustees incurs in performing its
             126      duties as trustee of the trust fund.
             127          (6) The board of trustees shall ensure that:
             128          (a) money deposited into the trust fund is expended only for the costs of annual leave
             129      II, including any allotted benefits under Subsection 67-19-14.6 (4); and
             130          (b) assets of the trust fund are dedicated to providing annual leave II established by
             131      statute and rule.
             132          Section 5. Section 67-19f-202 is enacted to read:
             133          67-19f-202. Board of trustees of the State Employees' Annual Leave Program II
             134      Trust Fund.
             135          (1) (a) There is created a board of trustees of the State Employees' Annual Leave
             136      Program II Trust Fund composed of the following three members:
             137          (i) the state treasurer or the state treasurer's designee;
             138          (ii) the director of the Division of Finance or the director's designee; and
             139          (iii) the executive director of the Governor's Office of Management and Budget or the
             140      executive director's designee.
             141          (b) The state treasurer is chair of the board.
             142          (c) Three members of the board is a quorum.
             143          (d) A member may not receive compensation or benefits for the member's service, but
             144      may receive per diem and travel expenses as allowed in:
             145          (i) Section 63A-3-106 ;
             146          (ii) Section 63A-3-107 ; and
             147          (iii) rules made by the Division of Finance according to Sections 63A-3-106 and
             148      63A-3-107 .
             149          (e) (i) Except as provided in Subsection (1)(e)(ii), the state treasurer shall staff the


             150      board of trustees.
             151          (ii) The Division of Finance shall provide accounting services for the trust fund.
             152          (2) The board shall:
             153          (a) on behalf of the state, act as trustee of the trust fund created under Section
             154      67-19f-201 and exercise the state's fiduciary responsibilities;
             155          (b) meet at least twice per year;
             156          (c) review and approve the policies, projections, rules, criteria, procedures, forms,
             157      standards, performance goals, and actuarial reports for the trust fund;
             158          (d) review and approve the budget for the trust fund;
             159          (e) review financial records for the trust fund, including trust fund receipts,
             160      expenditures, and investments; and
             161          (f) do any other things necessary to perform the state's fiduciary obligations under the
             162      trust fund.
             163          (3) The board may:
             164          (a) commission and obtain actuarial studies of the liabilities for the trust fund; and
             165          (b) for purposes of the trust fund, establish labor additive rates to charge for the
             166      administrative expenses of the trust fund.
             167          (4) The attorney general shall:
             168          (a) act as legal counsel and provide legal representation to the board of trustees; and
             169          (b) attend, or direct an attorney from the Office of the Attorney General to attend, each
             170      meeting of the board of trustees.
             171          Section 6. Section 67-19f-301 is enacted to read:
             172     
Part 3. Investment of Trust Funds

             173          67-19f-301. Investment of State Employees' Annual Leave Program II Trust
             174      Fund.
             175          (1) The state treasurer shall invest the assets of the trust fund with the primary goal of
             176      providing for the stability, income, and growth of the principal.
             177          (2) Nothing in this section requires a specific outcome in investing.
             178          (3) The state treasurer may deduct any administrative costs incurred in managing trust
             179      fund assets from earnings before distributing the trust fund assets.
             180          (4) (a) The state treasurer may employ professional asset managers to assist in the


             181      investment of assets of the trust fund.
             182          (b) The treasurer may only provide compensation to asset managers from earnings
             183      generated by the trust fund's investments.
             184          Section 7. Section 67-19f-302 is enacted to read:
             185          67-19f-302. State treasurer to follow "prudent investor" rule -- Standard of care.
             186          (1) The state treasurer shall invest and manage the trust fund assets as a prudent
             187      investor would, by:
             188          (a) considering the purposes, terms, distribution requirements, and other circumstances
             189      of the trust fund; and
             190          (b) exercising reasonable care, skill, and caution in order to meet the standard of care
             191      of a prudent investor.
             192          (2) In determining whether the state treasurer has met the standard of care of a prudent
             193      investor, the judge or finder of fact shall:
             194          (a) consider the state treasurer's actions in light of the facts and circumstances existing
             195      at the time of the investment decision or action, and not by hindsight; and
             196          (b) evaluate the state treasurer's investment and management decisions respecting
             197      individual assets:
             198          (i) not in isolation, but in the context of the trust fund portfolio as a whole; and
             199          (ii) as a part of an overall investment strategy that has risk and return objectives
             200      reasonably suited to the trust fund.


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