Senator Todd Weiler proposes the following substitute bill:


1     
RETIREMENT WITHDRAWAL MODIFICATIONS

2     
2015 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Todd Weiler

5     
House Sponsor: Kraig Powell

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          ▸     allows certain withdrawing entities to make an election to withdraw from
14     participation in a Utah retirement system or plan for current and future employees in
15     certain circumstances;
16          ▸     requires the withdrawing entity to pay certain costs that arise out of the election of
17     the withdrawal;
18          ▸     excludes all employees of a withdrawing entity from participation in the Public
19     Employees' Contributory Retirement System, the Public Employees'
20     Noncontributory Retirement System, and the New Public Employees' Tier II
21     Contributory Retirement Act under certain circumstances;
22          ▸     requires certain reporting from a withdrawing entity; and
23          ▸     makes technical changes.
24     Money Appropriated in this Bill:
25          None

26     Other Special Clauses:
27          This bill provides a special effective date.
28     Utah Code Sections Affected:
29     AMENDS:
30          49-11-623, as enacted by Laws of Utah 2014, Chapter 365
31          49-12-203, as last amended by Laws of Utah 2014, Chapters 15, 201, and 365
32          49-13-203, as last amended by Laws of Utah 2014, Chapters 15 and 365
33          49-22-203, as last amended by Laws of Utah 2014, Chapters 15 and 365
34     

35     Be it enacted by the Legislature of the state of Utah:
36          Section 1. Section 49-11-623 is amended to read:
37          49-11-623. Withdrawing entity -- Participation election date -- Withdrawal costs
38     -- Rulemaking.
39          (1) As used in this section, "withdrawing entity" means an entity that:
40          (a) participates in a system or plan under this title prior to July 1, 2014;
41          (b) provides mental health and substance abuse services for a county under Section
42     17-50-318;
43          (c) after beginning participation with a system or plan under this title, has modified its
44     federal tax status to a nonprofit organization that qualifies under Section 501(c)(3) of the
45     Internal Revenue Code; and
46          (d) is not a state institution of higher education as described in Section 53B-2-101.
47          (2) Notwithstanding any other provision of this title, a withdrawing entity may provide
48     for the participation of its employees with that system or plan as follows:
49          (a) the withdrawing entity shall determine a date that is no later than January 1, 2017,
50     on which the withdrawing entity shall make an election under Subsection (3); and
51          (b) subject to the provisions of Subsection (6), the withdrawing entity shall pay to the
52     office any reasonable actuarial and administrative costs determined by the office to have arisen
53     out of an election made under this section.
54          (3) The withdrawing entity described under Subsection (2) may elect to:
55          (a) (i) continue its participation for all current employees of the withdrawing entity,
56     who are covered by a system or plan as of the date set under Subsection (2)(a); and

57          [(b)] (ii) withdraw from participation in all systems or plans for all persons initially
58     entering employment with the withdrawing entity, beginning on the date set under Subsection
59     (2)(a)[.]; or
60          (b) withdraw from participation in all systems or plans for all current and future
61     employees of the withdrawing entity, beginning on the date set under Subsection (2)(a).
62          (4) (a) An election provided under Subsection (3):
63          (i) is a one-time election made no later than the date specified under Subsection (2)(a);
64          (ii) shall be documented by a resolution adopted by the governing body of the
65     withdrawing entity;
66          (iii) is irrevocable; and
67          (iv) applies to the withdrawing entity as the employer and to all employees of the
68     withdrawing entity.
69          (b) Notwithstanding an election made under Subsection (3), any eligibility for service
70     credit earned by an employee under this title before the date specified under Subsection (2)(a)
71     is not affected by this section.
72          (5) If a withdrawing entity elects to continue participation under Subsection (3), the
73     withdrawing entity shall continue to be subject to the laws and the rules governing the system
74     or plan in which an employee participates, including the accrual of service credit and payment
75     of contributions.
76          (6) Before a withdrawing entity may withdraw under this section, the withdrawing
77     entity and the office shall enter into an agreement on:
78          (a) the costs described under Subsection (2)(b); and
79          (b) arrangements for the payment of the costs described under Subsection (2)(b).
80          (7) (a) A withdrawing entity that withdraws under Subsection (3)(a) or (b), shall
81     prepare and submit to the governor and the Retirement and Independent Entities Committee, by
82     October 1 of each year, an annual written report of its finances, operations, and services for the
83     preceding fiscal year.
84          (b) The report shall include:
85          (i) budget data showing personnel and employee benefit expenditures, financial status,
86     and any outstanding loan information; and
87          (ii) historical data from previous years for comparison with data reported under

88     Subsections (7)(a) and (b)(i).
89          [(6)] (8) The board shall make rules to implement this section.
90          Section 2. Section 49-12-203 is amended to read:
91          49-12-203. Exclusions from membership in system.
92          (1) The following employees are not eligible for service credit in this system:
93          (a) subject to the requirements of Subsection (2), an employee whose employment
94     status is temporary in nature due to the nature or the type of work to be performed;
95          (b) except as provided under Subsection (3)(a), an employee of an institution of higher
96     education who participates in a retirement system with a public or private retirement system,
97     organization, or company designated by the State Board of Regents during any period in which
98     required contributions based on compensation have been paid on behalf of the employee by the
99     employer;
100          (c) an employee serving as an exchange employee from outside the state;
101          (d) an executive department head of the state, a member of the State Tax Commission,
102     the Public Service Commission, and a member of a full-time or part-time board or commission
103     who files a formal request for exemption;
104          (e) an employee of the Department of Workforce Services who is covered under
105     another retirement system allowed under Title 35A, Chapter 4, Employment Security Act;
106          (f) an employee who is employed on or after July 1, 2009, with an employer that has
107     elected, prior to July 1, 2009, to be excluded from participation in this system under Subsection
108     49-12-202(2)(c);
109          (g) an employee who is employed on or after July 1, 2014, with an employer that has
110     elected, prior to July 1, 2014, to be excluded from participation in this system under Subsection
111     49-12-202(2)(d); or
112          (h) an employee who is employed with a withdrawing entity that has elected, prior to
113     January 1, 2017, to exclude:
114          (i) new employees from participation in this system under Subsection
115     49-11-623(3)[.](a); or
116          (ii) all employees from participation in this system under Subsection 49-11-623(3)(b).
117          (2) If an employee whose status is temporary in nature due to the nature of type of
118     work to be performed:

119          (a) is employed for a term that exceeds six months and the employee otherwise
120     qualifies for service credit in this system, the participating employer shall report and certify to
121     the office that the employee is a regular full-time employee effective the beginning of the
122     seventh month of employment; or
123          (b) was previously terminated prior to being eligible for service credit in this system
124     and is reemployed within three months of termination by the same participating employer, the
125     participating employer shall report and certify that the member is a regular full-time employee
126     when the total of the periods of employment equals six months and the employee otherwise
127     qualifies for service credits in this system.
128          (3) (a) Upon cessation of the participating employer contributions, an employee under
129     Subsection (1)(b) is eligible for service credit in this system.
130          (b) Notwithstanding the provisions of Subsection (1)(f), any eligibility for service
131     credit earned by an employee under this chapter before July 1, 2009 is not affected under
132     Subsection (1)(f).
133          (c) Notwithstanding the provisions of Subsection (1)(g), any eligibility for service
134     credit earned by an employee under this chapter before July 1, 2014, is not affected under
135     Subsection (1)(g).
136          (4) Upon filing a written request for exemption with the office, the following
137     employees shall be exempt from coverage under this system:
138          (a) a full-time student or the spouse of a full-time student and individuals employed in
139     a trainee relationship;
140          (b) an elected official;
141          (c) an executive department head of the state, a member of the State Tax Commission,
142     a member of the Public Service Commission, and a member of a full-time or part-time board or
143     commission;
144          (d) an employee of the Governor's Office of Management and Budget;
145          (e) an employee of the Governor's Office of Economic Development;
146          (f) an employee of the Commission on Criminal and Juvenile Justice;
147          (g) an employee of the Governor's Office;
148          (h) an employee of the State Auditor's Office;
149          (i) an employee of the State Treasurer's Office;

150          (j) any other member who is permitted to make an election under Section 49-11-406;
151          (k) a person appointed as a city manager or chief city administrator or another person
152     employed by a municipality, county, or other political subdivision, who is an at-will employee;
153     and
154          (l) an employee of an interlocal cooperative agency created under Title 11, Chapter 13,
155     Interlocal Cooperation Act, who is engaged in a specialized trade customarily provided through
156     membership in a labor organization that provides retirement benefits to its members.
157          (5) (a) Each participating employer shall prepare a list designating those positions
158     eligible for exemption under Subsection (4).
159          (b) An employee may not be exempted unless the employee is employed in an
160     exempted position designated by the participating employer.
161          (6) (a) In accordance with this section, a municipality, county, or political subdivision
162     may not exempt more than 50 positions or a number equal to 10% of the employees of the
163     municipality, county, or political subdivision whichever is lesser.
164          (b) A municipality, county, or political subdivision may exempt at least one regular
165     full-time employee.
166          (7) Each participating employer shall:
167          (a) file employee exemptions annually with the office; and
168          (b) update the employee exemptions in the event of any change.
169          (8) The office may make rules to implement this section.
170          Section 3. Section 49-13-203 is amended to read:
171          49-13-203. Exclusions from membership in system.
172          (1) The following employees are not eligible for service credit in this system:
173          (a) subject to the requirements of Subsection (2), an employee whose employment
174     status is temporary in nature due to the nature or the type of work to be performed;
175          (b) except as provided under Subsection (3)(a), an employee of an institution of higher
176     education who participates in a retirement system with a public or private retirement system,
177     organization, or company designated by the State Board of Regents during any period in which
178     required contributions based on compensation have been paid on behalf of the employee by the
179     employer;
180          (c) an employee serving as an exchange employee from outside the state;

181          (d) an executive department head of the state or a legislative director, senior executive
182     employed by the governor's office, a member of the State Tax Commission, a member of the
183     Public Service Commission, and a member of a full-time or part-time board or commission
184     who files a formal request for exemption;
185          (e) an employee of the Department of Workforce Services who is covered under
186     another retirement system allowed under Title 35A, Chapter 4, Employment Security Act;
187          (f) an employee who is employed with an employer that has elected to be excluded
188     from participation in this system under Subsection 49-13-202(5), effective on or after the date
189     of the employer's election under Subsection 49-13-202(5); or
190          (g) an employee who is employed with a withdrawing entity that has elected, prior to
191     January 1, 2017, to exclude:
192          (i) new employees from participation in this system under Subsection
193     49-11-623(3)[.](a); or
194          (ii) all employees from participation in this system under Subsection 49-11-623(3)(b).
195          (2) If an employee whose status is temporary in nature due to the nature of type of
196     work to be performed:
197          (a) is employed for a term that exceeds six months and the employee otherwise
198     qualifies for service credit in this system, the participating employer shall report and certify to
199     the office that the employee is a regular full-time employee effective the beginning of the
200     seventh month of employment; or
201          (b) was previously terminated prior to being eligible for service credit in this system
202     and is reemployed within three months of termination by the same participating employer, the
203     participating employer shall report and certify that the member is a regular full-time employee
204     when the total of the periods of employment equals six months and the employee otherwise
205     qualifies for service credits in this system.
206          (3) (a) Upon cessation of the participating employer contributions, an employee under
207     Subsection (1)(b) is eligible for service credit in this system.
208          (b) Notwithstanding the provisions of Subsection (1)(f), any eligibility for service
209     credit earned by an employee under this chapter before the date of the election under
210     Subsection 49-13-202(5) is not affected under Subsection (1)(f).
211          (4) Upon filing a written request for exemption with the office, the following

212     employees shall be exempt from coverage under this system:
213          (a) a full-time student or the spouse of a full-time student and individuals employed in
214     a trainee relationship;
215          (b) an elected official;
216          (c) an executive department head of the state, a member of the State Tax Commission,
217     a member of the Public Service Commission, and a member of a full-time or part-time board or
218     commission;
219          (d) an employee of the Governor's Office of Management and Budget;
220          (e) an employee of the Governor's Office of Economic Development;
221          (f) an employee of the Commission on Criminal and Juvenile Justice;
222          (g) an employee of the Governor's Office;
223          (h) an employee of the State Auditor's Office;
224          (i) an employee of the State Treasurer's Office;
225          (j) any other member who is permitted to make an election under Section 49-11-406;
226          (k) a person appointed as a city manager or chief city administrator or another person
227     employed by a municipality, county, or other political subdivision, who is an at-will employee;
228          (l) an employee of an interlocal cooperative agency created under Title 11, Chapter 13,
229     Interlocal Cooperation Act, who is engaged in a specialized trade customarily provided through
230     membership in a labor organization that provides retirement benefits to its members; and
231          (m) an employee of the Utah Science Technology and Research Initiative created under
232     Title 63M, Chapter 2, Utah Science Technology and Research Governing Authority Act.
233          (5) (a) Each participating employer shall prepare a list designating those positions
234     eligible for exemption under Subsection (4).
235          (b) An employee may not be exempted unless the employee is employed in a position
236     designated by the participating employer.
237          (6) (a) In accordance with this section, a municipality, county, or political subdivision
238     may not exempt more than 50 positions or a number equal to 10% of the employees of the
239     municipality, county, or political subdivision, whichever is lesser.
240          (b) A municipality, county, or political subdivision may exempt at least one regular
241     full-time employee.
242          (7) Each participating employer shall:

243          (a) file employee exemptions annually with the office; and
244          (b) update the employee exemptions in the event of any change.
245          (8) The office may make rules to implement this section.
246          Section 4. Section 49-22-203 is amended to read:
247          49-22-203. Exclusions from membership in system.
248          (1) The following employees are not eligible for service credit in this system:
249          (a) subject to the requirements of Subsection (2), an employee whose employment
250     status is temporary in nature due to the nature or the type of work to be performed;
251          (b) except as provided under Subsection (3), an employee of an institution of higher
252     education who participates in a retirement system with a public or private retirement system,
253     organization, or company designated by the State Board of Regents during any period in which
254     required contributions based on compensation have been paid on behalf of the employee by the
255     employer;
256          (c) an employee serving as an exchange employee from outside the state;
257          (d) an employee of the Department of Workforce Services who is covered under
258     another retirement system allowed under Title 35A, Chapter 4, Employment Security Act; or
259          (e) an employee who is employed with a withdrawing entity that has elected, prior to
260     January 1, 2017, to exclude:
261          (i) new employees from participation in this system under Subsection
262     49-11-623(3)[.](a); or
263          (ii) all employees from participation in this system under Subsection 49-11-623(3)(b).
264          (2) If an employee whose status is temporary in nature due to the nature of type of
265     work to be performed:
266          (a) is employed for a term that exceeds six months and the employee otherwise
267     qualifies for service credit in this system, the participating employer shall report and certify to
268     the office that the employee is a regular full-time employee effective the beginning of the
269     seventh month of employment; or
270          (b) was previously terminated prior to being eligible for service credit in this system
271     and is reemployed within three months of termination by the same participating employer, the
272     participating employer shall report and certify that the member is a regular full-time employee
273     when the total of the periods of employment equals six months and the employee otherwise

274     qualifies for service credits in this system.
275          (3) Upon cessation of the participating employer contributions, an employee under
276     Subsection (1)(b) is eligible for service credit in this system.
277          Section 5. Effective date.
278          If approved by two-thirds of all the members elected to each house, this bill takes effect
279     upon approval by the governor, or the day following the constitutional time limit of Utah
280     Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
281     the date of veto override.