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Second Substitute H.B. 297

Representative Ron Bigelow proposes the following substitute bill:




Sponsor: Ron Bigelow

             5      This act modifies the Utah State Retirement Act and the State Officers and Employees Code
             6      by requiring an employee to have five years of service credit and meet federal eligibility
             7      requirements to be eligible to purchase retirement service credit. This act provides for the
             8      withdrawal of independent corporations from the state retirement systems and provides for
             9      withdrawal procedures. This act modifies provisions governing the use of unused sick leave
             10      at retirement. This act takes effect on July 1, 2002.
             11      This act affects sections of Utah Code Annotated 1953 as follows:
             12      AMENDS:
             13          49-3-410, as last amended by Chapter 141, Laws of Utah 2001
             14          67-19-14, as last amended by Chapter 64, Laws of Utah 1999
             15      ENACTS:
             16          49-11-621, Utah Code Annotated 1953
             17      Be it enacted by the Legislature of the state of Utah:
             18          Section 1. Section 49-3-410 is amended to read:
             19           49-3-410. Purchase of retirement credit -- Conditions -- Cost.
             20          (1) Any member of this system may receive retirement service credit in accordance with
             21      Subsection (2).
             22          (2) (a) A member may purchase or a member and an employing unit may jointly purchase
             23      a combined maximum total of five years of retirement service credit which is not otherwise
             24      purchasable under this chapter.
             25          (b) The number of years of retirement service credit purchased may exceed the number of

             26      years or age required by the member to retire with no actuarial reduction.
             27          (c) The purchase of retirement service credit must allow the member to meet the retirement
             28      eligibility requirements of this system with no actuarial reduction.
             29          (d) The member must retire effective immediately after the purchase of retirement service
             30      credit is made.
             31          (e) The member shall pay at least 5% of the cost of the purchase.
             32          (f) The member shall have five years of service credit and otherwise meet federal
             33      eligibility requirements to qualify for a purchase of service credit under this section.
             34          (3) The purchase price for the retirement service credit shall be calculated and paid for as
             35      provided in Section 49-1-407 .
             36          (4) (a) The employing unit may elect to purchase retirement service credit for a member
             37      under Subsection (2) while the member is on an unpaid leave of absence.
             38          (b) If the member is on an unpaid leave of absence, the employing unit may make
             39      installment payments towards the purchase in amounts fixed by the administrator.
             40          (c) The member shall retire when the purchase obligations are fulfilled.
             41          (5) A member who retires after the employer purchases retirement service credit under this
             42      section shall be subject to the provisions of Section 49-1-505 .
             43          (6) Prior to making any purchase of service credit under this section, an employing unit
             44      shall adopt a purchase policy that includes nondiscriminatory participation standards for all
             45      employees.
             46          Section 2. Section 49-11-621 is enacted to read:
             47          49-11-621. Withdrawal of independent corporations.
             48          (1) Notwithstanding any other provision of this title, an independent corporation, as
             49      defined in Section 63E-1-102 , which participates in a system or plan prior to July 1, 2002, may
             50      withdraw from participation with that system or plan as follows:
             51          (a) the independent corporation shall comply with the provisions of Title 63E, Chapter 2,
             52      Independent Corporations Act;
             53          (b) upon complying with the requirements of Title 63E, Chapter 2, Independent
             54      Corporations Act, the independent corporation and the board shall agree upon a date on which the
             55      independent entity shall make an election under Subsection (2);
             56          (c) an employee hired after the date set under Subsection (1)(b) may not participate in a

             57      system or plan; and
             58          (d) the withdrawing independent corporation shall pay to the office any actuarial or
             59      administrative cost, determined by the office, to have arisen out of the withdrawal.
             60          (2) The independent corporation shall elect to:
             61          (a) continue its participation for all current employees covered by a system or plan on the
             62      date set under Subsection (1)(b); or
             63          (b) withdraw from participation in all systems or plans for all employees as of the date set
             64      under Subsection (1)(b).
             65          (3) If an independent corporation elects to continue participation under Subsection (2)(a),
             66      the independent corporation and its employees shall continue to be subject to the laws and the rules
             67      governing the system or plan in which the employee participates, including the accrual of service
             68      credit and payment of contributions.
             69          (4) The independent corporation may create an alternative retirement program for its
             70      employees not covered by a system or plan in accordance with its election under Subsection (2).
             71          Section 3. Section 67-19-14 is amended to read:
             72           67-19-14. Sick leave -- Unused sick days -- Retirement program.
             73          (1) The director shall, as an incentive to reduce sick leave abuse, make rules governing
             74      procedures whereby, after an employee has accumulated 18 unused sick leave days, any sick days
             75      accumulated during any calendar year in excess of eight, at the option of that employee, may be
             76      carried as "converted sick leave" which the employee may use at a later date as annual leave,
             77      regular sick leave, or as paid-up health and medical insurance at the time of retirement on the basis
             78      of the payment by the employing department of one month's premium for each day of accumulated
             79      sick leave.
             80          (2) (a) (i) The director shall make rules for the governance of a retirement program.
             81          (ii) Employing departments may offer the retirement option to an employee.
             82          (iii) Employee participation in any part of the retirement program shall be entirely
             83      voluntary.
             84          (iv) An employee must be eligible for retirement benefits to qualify for the program.
             85          (b) (i) (A) When an employee retires, the program shall provide for the employee to be paid
             86      for 25% of the employee's unused accumulated sick leave at the employee's preretirement rate of
             87      pay.

             88          (B) An employee shall have the option of having all monies from the cashout under
             89      Subsection (b)(i)(A) transferred directly to the deferred compensation plan qualified under Section
             90      401(k) of the Internal Revenue Code which is sponsored by the Utah State Retirement Board.
             91          (ii) The employing department shall also provide the same health and life insurance
             92      benefits the employee has at the time of retirement until the employee becomes eligible for
             93      Medicare, but this benefit may not exceed five years' coverage from the date of retirement, except
             94      as provided under Subsection (2)(c).
             95          (c) (i) An employee whose unused sick leave, after the 25% cashout has been paid, exceeds
             96      the 60 days maximum for five-year coverage under Subsection (2)(b), may continue the health and
             97      life insurance, which the employee had at the time of retirement, at the rate of one month's
             98      coverage for each day of unused sick leave above the 60 days, but only to the age eligible for
             99      Medicare. If the employee has reached the age eligible for Medicare, coverage for the employee's
             100      spouse may continue under this Subsection (2)(c)(i) until the employee's spouse reaches the age
             101      eligible for Medicare.
             102          (ii) An employee and the employee's spouse who are or who later become eligible for
             103      Medicare may purchase Medicare supplemental insurance at the rate of one month's coverage for
             104      both the employee and the employee's spouse for each day of the employee's unused sick leave if
             105      the employee and the employee's spouse have reached the age eligible for Medicare.
             106          (iii) The coverages under this Subsection (2)(c) are in addition to the coverage provided
             107      under Subsection (2)(b).
             108          (d) Any costs or savings for this act shall be borne by the agency and shall not be
             109      appropriated by the Legislature.
             110          (3) (a) The director shall make rules to provide a continuation of health and dental
             111      insurance to the surviving spouse and family of any state employee whose death occurs in the line
             112      of duty. The insurance coverage shall continue for a period of five years or until the surviving
             113      spouse becomes eligible for Medicare, whichever comes first.
             114          (b) The rules shall also provide for the use of accumulated sick leave in the same manner
             115      as provided under Subsection (2)(b).
             116          (c) The costs of paying for the benefits under Subsections (3)(a) and (b) shall be included
             117      in the agency's budget request each year following the date of death of the employee.
             118          Section 4. Effective date.

             119          This act takes effect on July 1, 2002.

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