This document includes Senate Committee Amendments incorporated into the bill on Mon, Feb 29, 2016 at 1:30 PM by lpoole.
1     
RETIREMENT AMENDMENTS

2     
2016 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 amending
10     certain retirement provisions.
11     Highlighted Provisions:
12          This bill:
13          ▸     requires the Utah State Retirement Board to increase certified employer contribution
14     rates to reflect any increased costs from retirement benefit enhancements enacted
15     during a general session or special session under specified conditions;
16          ▸     amends the definition of "regular full-time employee" to exclude from retirement
17     participation certain classified school employees who work on a contract for the
18     purposes of vocational rehabilitation and the employment and training of people
19     with significant disabilities; and
20          ▸     makes technical changes.
21     Money Appropriated in this Bill:
22          None
23     Other Special Clauses:
24          This bill provides a special effective date.
25     Utah Code Sections Affected:
26     AMENDS:
27          49-11-301, as last amended by Laws of Utah 2004, Chapter 322

28          49-12-102, as last amended by Laws of Utah 2015, Chapter 243
29          49-13-102, as last amended by Laws of Utah 2014, Chapter 15
30          49-22-102, as last amended by Laws of Utah 2013, Chapters 109 and 127
31     

32     Be it enacted by the Legislature of the state of Utah:
33          Section 1. Section 49-11-301 is amended to read:
34          49-11-301. Creation -- Board to act as trustees of the fund -- Commingling and
35     pooling of funds -- Interest earnings -- Funded ratio.
36          (1) There is created a common trust fund known as the "Utah State Retirement
37     Investment Fund" for the purpose of enlarging the investment base and simplifying investment
38     procedures and functions.
39          (2) (a) The board shall act as trustees of the Utah State Retirement Investment Fund
40     and, through the executive director, may commingle and pool the funds and investments of any
41     system, plan, or program into the Utah State Retirement Investment Fund, if the principal
42     amounts of the participating funds do not lose their individual identity and are maintained as
43     separate trust funds on the books of the office.
44          (b) (i) In combining the investments of any fund, each of the participating funds shall
45     be credited initially with its share of the total assets transferred to the Utah State Retirement
46     Investment Fund.
47          (ii) The value of the transferred assets shall be calculated in accordance with generally
48     accepted accounting principles.
49          (c) Subsequent transfers of additional capital from participating funds shall be credited
50     similarly to its respective trust account.
51          (d) The income or principal or equity credit belonging to one participating fund may
52     not be transferred to another, except for the purpose of:
53          (i) actuarially recommended transfers in order to adjust employer contribution rates for
54     an employer that participates in both contributory and noncontributory systems; or
55          (ii) transfers which reflect the value of service credit accrued in different systems
56     during a member's career.
57          (3) The assets of the funds are for the exclusive benefit of the members, participants,
58     and covered individuals and may not be diverted or appropriated for any purpose other than

59     that permitted by this title.
60          (4) (a) Interest and other earnings shall be credited to each participating fund on a pro
61     rata equity position basis.
62          (b) (i) A portion of the interest and other earnings of the common trust fund may be
63     credited to a reserve account within the Utah State Retirement Investment Fund to meet
64     adverse experiences arising from investments or other contingencies.
65          (ii) Each participating fund shall retain its proportionate equity in the reserve account.
66          (5) (a) The actuarial funded ratio of the systems may reach and be maintained at 110%,
67     as determined by the board's actuary using assumptions adopted by the board, before the board
68     is required to certify a decrease in contribution rates.
69          (b) [The] Except as provided in Subsection (6), the board may not increase
70     contribution rates to attain an actuarial funded ratio greater than 100%.
71          (6) (a) The cost of any amendment to this title shall be included in the final
72     contribution rates adopted and certified by the board in accordance with Subsections
73     49-11-102(14) and 49-11-203(1)(l).
74          (b) If a preliminary certified contribution rate approved by the board prior to an annual
75     general session or special session of the Legislature was maintained at a previous year's level
76     that is higher than the contribution rate calculated by the board's actuary for that year in
77     accordance with Subsection (5)(a), the board's final certified contribution rate shall be the sum
78     of the actuarially determined costs from any amendment to this title during the general session
79     or special session and the preliminary certified contribution rate.
80          Section 2. Section 49-12-102 is amended to read:
81          49-12-102. Definitions.
82          As used in this chapter:
83          (1) "Benefits normally provided":
84          (a) means a benefit offered by an employer, including:
85          (i) a leave benefit of any kind;
86          (ii) insurance coverage of any kind if the employer pays some or all of the premium for
87     the coverage;
88          (iii) employer contributions to a health savings account, health reimbursement account,
89     health reimbursement arrangement, or medical expense reimbursement plan; and

90          (iv) a retirement benefit of any kind if the employer pays some or all of the cost of the
91     benefit; and
92          (b) does not include:
93          (i) a payment for social security;
94          (ii) workers' compensation insurance;
95          (iii) unemployment insurance;
96          (iv) a payment for Medicare;
97          (v) a payment or insurance required by federal or state law that is similar to a payment
98     or insurance listed in Subsection (1)(b)(i), (ii), (iii), or (iv);
99          (vi) any other benefit that state or federal law requires an employer to provide an
100     employee who would not otherwise be eligible to receive the benefit; or
101          (vii) any benefit that an employer provides an employee in order to avoid a penalty or
102     tax under the Patient Protection and Affordable Care Act, Pub. L. No. 111-148 and the Health
103     Care Education Reconciliation Act of 2010, Pub. L. No. 111-152, and related federal
104     regulations, including a penalty imposed by Internal Revenue Code, Section 4980H.
105          (2) (a) "Compensation" means, except as provided in Subsection (2)(c), the total
106     amount of payments made by a participating employer to a member of this system for services
107     rendered to the participating employer, including:
108          (i) bonuses;
109          (ii) cost-of-living adjustments;
110          (iii) other payments currently includable in gross income and that are subject to social
111     security deductions, including any payments in excess of the maximum amount subject to
112     deduction under social security law;
113          (iv) amounts that the member authorizes to be deducted or reduced for salary deferral
114     or other benefits authorized by federal law; and
115          (v) member contributions.
116          (b) "Compensation" for purposes of this chapter may not exceed the amount allowed
117     under Internal Revenue Code, Section 401(a)(17).
118          (c) "Compensation" does not include:
119          (i) the monetary value of remuneration paid in kind, including a residence or use of
120     equipment;

121          (ii) the cost of any employment benefits paid for by the participating employer;
122          (iii) compensation paid to a temporary employee, an exempt employee, or an employee
123     otherwise ineligible for service credit;
124          (iv) any payments upon termination, including accumulated vacation, sick leave
125     payments, severance payments, compensatory time payments, or any other special payments; or
126          (v) any allowances or payments to a member for costs or expenses paid by the
127     participating employer, including automobile costs, uniform costs, travel costs, tuition costs,
128     housing costs, insurance costs, equipment costs, and dependent care costs.
129          (d) The executive director may determine if a payment not listed under this Subsection
130     (2) falls within the definition of compensation.
131          (3) "Final average salary" means the amount computed by averaging the highest five
132     years of annual compensation preceding retirement subject to Subsections (3)(a), (b), (c), and
133     (d).
134          (a) Except as provided in Subsection (3)(b), the percentage increase in annual
135     compensation in any one of the years used may not exceed the previous year's compensation by
136     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
137     of the dollar during the previous year, as measured by a United States Bureau of Labor
138     Statistics Consumer Price Index average as determined by the board.
139          (b) In cases where the participating employer provides acceptable documentation to the
140     office, the limitation in Subsection (3)(a) may be exceeded if:
141          (i) the member has transferred from another agency; or
142          (ii) the member has been promoted to a new position.
143          (c) If the member retires more than six months from the date of termination of
144     employment, the member is considered to have been in service at the member's last rate of pay
145     from the date of the termination of employment to the effective date of retirement for purposes
146     of computing the member's final average salary only.
147          (d) If the member has less than five years of service credit in this system, final average
148     salary means the average annual compensation paid to the member during the full period of
149     service credit.
150          (4) "Participating employer" means an employer which meets the participation
151     requirements of Sections 49-12-201 and 49-12-202.

152          (5) (a) "Regular full-time employee" means an employee whose term of employment
153     for a participating employer contemplates continued employment during a fiscal or calendar
154     year and whose employment normally requires an average of 20 hours or more per week,
155     except as modified by the board, and who receives benefits normally provided by the
156     participating employer.
157          (b) "Regular full-time employee" includes:
158          (i) a teacher whose term of employment for a participating employer contemplates
159     continued employment during a school year and who teaches half-time or more;
160          (ii) a classified school employee:
161          (A) who is hired before July 1, 2013; and
162          (B) whose employment normally requires an average of 20 hours per week or more for
163     a participating employer, regardless of benefits provided;
164          (iii) an officer, elective or appointive, who earns $500 or more per month, indexed as
165     of January 1, 1990, as provided in Section 49-12-407;
166          (iv) a faculty member or employee of an institution of higher education who is
167     considered full-time by that institution of higher education; and
168          (v) an individual who otherwise meets the definition of this Subsection (5) who
169     performs services for a participating employer through a professional employer organization or
170     similar arrangement.
171          (c) "Regular full-time employee" does not include a classified school employee:
172          (i) (A) who is hired on or after July 1, 2013; and
173          (B) who does not receive benefits normally provided by the participating employer
174     even if the employment normally requires an average of 20 hours per week or more for a
175     participating employer; [or]
176          (ii) (A) who is hired before July 1, 2013;
177          (B) who did not qualify as a regular full-time employee before July 1, 2013;
178          (C) who does not receive benefits normally provided by the participating employer;
179     and
180          (D) whose employment hours are increased on or after July 1, 2013, to require an
181     average of 20 hours per week or more for a participating employer[.]; or
182          (iii) who is a person working on a contract:

183          (A) for the purposes of vocational rehabilitation and the employment and training of
184     people with significant disabilities; and
185          (B) that has been set aside from procurement requirements by the state pursuant to
186     Section 63G-6a-805 or the federal government pursuant to 41 U.S.C. Sec. 8501 et seq.
187          (6) "System" means the Public Employees' Contributory Retirement System created
188     under this chapter.
189          (7) "Years of service credit" means:
190          (a) a period consisting of 12 full months as determined by the board;
191          (b) a period determined by the board, whether consecutive or not, during which a
192     regular full-time employee performed services for a participating employer, including any time
193     the regular full-time employee was absent on a paid leave of absence granted by a participating
194     employer or was absent in the service of the United States government on military duty as
195     provided by this chapter; or
196          (c) the regular school year consisting of not less than eight months of full-time service
197     for a regular full-time employee of an educational institution.
198          Section 3. Section 49-13-102 is amended to read:
199          49-13-102. Definitions.
200          As used in this chapter:
201          (1) "Benefits normally provided" has the same meaning as defined in Section
202     49-12-102.
203          (2) (a) Except as provided in Subsection (2)(c), "compensation" means the total
204     amount of payments made by a participating employer to a member of this system for services
205     rendered to the participating employer, including:
206          (i) bonuses;
207          (ii) cost-of-living adjustments;
208          (iii) other payments currently includable in gross income and that are subject to social
209     security deductions, including any payments in excess of the maximum amount subject to
210     deduction under social security law; and
211          (iv) amounts that the member authorizes to be deducted or reduced for salary deferral
212     or other benefits authorized by federal law.
213          (b) "Compensation" for purposes of this chapter may not exceed the amount allowed

214     under Internal Revenue Code, Section 401(a)(17).
215          (c) "Compensation" does not include:
216          (i) the monetary value of remuneration paid in kind, including a residence or use of
217     equipment;
218          (ii) the cost of any employment benefits paid for by the participating employer;
219          (iii) compensation paid to a temporary employee, an exempt employee, or an employee
220     otherwise ineligible for service credit;
221          (iv) any payments upon termination, including accumulated vacation, sick leave
222     payments, severance payments, compensatory time payments, or any other special payments; or
223          (v) any allowances or payments to a member for costs or expenses paid by the
224     participating employer, including automobile costs, uniform costs, travel costs, tuition costs,
225     housing costs, insurance costs, equipment costs, and dependent care costs.
226          (d) The executive director may determine if a payment not listed under this Subsection
227     (2) falls within the definition of compensation.
228          (3) "Final average salary" means the amount computed by averaging the highest three
229     years of annual compensation preceding retirement subject to the following:
230          (a) Except as provided in Subsection (3)(b), the percentage increase in annual
231     compensation in any one of the years used may not exceed the previous year's compensation by
232     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
233     of the dollar during the previous year, as measured by a United States Bureau of Labor
234     Statistics Consumer Price Index average as determined by the board.
235          (b) In cases where the participating employer provides acceptable documentation to the
236     office, the limitation in Subsection (3)(a) may be exceeded if:
237          (i) the member has transferred from another agency; or
238          (ii) the member has been promoted to a new position.
239          (c) If the member retires more than six months from the date of termination of
240     employment and for purposes of computing the member's final average salary only, the
241     member is considered to have been in service at the member's last rate of pay from the date of
242     the termination of employment to the effective date of retirement.
243          (4) "Participating employer" means an employer which meets the participation
244     requirements of Sections 49-13-201 and 49-13-202.

245          (5) (a) "Regular full-time employee" means an employee whose term of employment
246     for a participating employer contemplates continued employment during a fiscal or calendar
247     year and whose employment normally requires an average of 20 hours or more per week,
248     except as modified by the board, and who receives benefits normally provided by the
249     participating employer.
250          (b) "Regular full-time employee" includes:
251          (i) a teacher whose term of employment for a participating employer contemplates
252     continued employment during a school year and who teaches half time or more;
253          (ii) a classified school employee:
254          (A) who is hired before July 1, 2013; and
255          (B) whose employment normally requires an average of 20 hours per week or more for
256     a participating employer, regardless of benefits provided;
257          (iii) an officer, elective or appointive, who earns $500 or more per month, indexed as
258     of January 1, 1990, as provided in Section 49-13-407;
259          (iv) a faculty member or employee of an institution of higher education who is
260     considered full time by that institution of higher education; and
261          (v) an individual who otherwise meets the definition of this Subsection (5) who
262     performs services for a participating employer through a professional employer organization or
263     similar arrangement.
264          (c) "Regular full-time employee" does not include a classified school employee:
265          (i) (A) who is hired on or after July 1, 2013; and
266          (B) who does not receive benefits normally provided by the participating employer
267     even if the employment normally requires an average of 20 hours per week or more for a
268     participating employer; [or]
269          (ii) (A) who is hired before July 1, 2013;
270          (B) who did not qualify as a regular full-time employee before July 1, 2013;
271          (C) who does not receive benefits normally provided by the participating employer;
272     and
273          (D) whose employment hours are increased on or after July 1, 2013, to require an
274     average of 20 hours per week or more for a participating employer[.]; or
275          (iii) who is a person working on a contract:

276          (A) for the purposes of vocational rehabilitation and the employment and training of
277     people with significant disabilities; and
278          (B) that has been set aside from procurement requirements by the state pursuant to
279     Section 63G-6a-805 or the federal government pursuant to 41 U.S.C. Sec. 8501 et seq.
280          (6) "System" means the Public Employees' Noncontributory Retirement System.
281          (7) "Years of service credit" means:
282          (a) a period consisting of 12 full months as determined by the board;
283          (b) a period determined by the board, whether consecutive or not, during which a
284     regular full-time employee performed services for a participating employer, including any time
285     the regular full-time employee was absent on a paid leave of absence granted by a participating
286     employer or was absent in the service of the United States government on military duty as
287     provided by this chapter; or
288          (c) the regular school year consisting of not less than eight months of full-time service
289     for a regular full-time employee of an educational institution.
290          Section 4. Section 49-22-102 is amended to read:
291          49-22-102. Definitions.
292          As used in this chapter:
293          (1) "Benefits normally provided" has the same meaning as defined in Section
294     49-12-102.
295          (2) (a) "Compensation" means, except as provided in Subsection (2)(c), the total
296     amount of payments made by a participating employer to a member of this system for services
297     rendered to the participating employer, including:
298          (i) bonuses;
299          (ii) cost-of-living adjustments;
300          (iii) other payments currently includable in gross income and that are subject to social
301     security deductions, including any payments in excess of the maximum amount subject to
302     deduction under social security law;
303          (iv) amounts that the member authorizes to be deducted or reduced for salary deferral
304     or other benefits authorized by federal law; and
305          (v) member contributions.
306          (b) "Compensation" for purposes of this chapter may not exceed the amount allowed

307     under Internal Revenue Code, Section 401(a)(17).
308          (c) "Compensation" does not include:
309          (i) the monetary value of remuneration paid in kind, including a residence or use of
310     equipment;
311          (ii) the cost of any employment benefits paid for by the participating employer;
312          (iii) compensation paid to a temporary employee or an employee otherwise ineligible
313     for service credit;
314          (iv) any payments upon termination, including accumulated vacation, sick leave
315     payments, severance payments, compensatory time payments, or any other special payments; or
316          (v) any allowances or payments to a member for costs or expenses paid by the
317     participating employer, including automobile costs, uniform costs, travel costs, tuition costs,
318     housing costs, insurance costs, equipment costs, and dependent care costs.
319          (d) The executive director may determine if a payment not listed under this Subsection
320     (2) falls within the definition of compensation.
321          (3) "Corresponding Tier I system" means the system or plan that would have covered
322     the member if the member had initially entered employment before July 1, 2011.
323          (4) "Final average salary" means the amount computed by averaging the highest five
324     years of annual compensation preceding retirement subject to Subsections (4)(a), (b), (c), and
325     (d).
326          (a) Except as provided in Subsection (4)(b), the percentage increase in annual
327     compensation in any one of the years used may not exceed the previous year's compensation by
328     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
329     of the dollar during the previous year, as measured by a United States Bureau of Labor
330     Statistics Consumer Price Index average as determined by the board.
331          (b) In cases where the participating employer provides acceptable documentation to the
332     office, the limitation in Subsection (4)(a) may be exceeded if:
333          (i) the member has transferred from another agency; or
334          (ii) the member has been promoted to a new position.
335          (c) If the member retires more than six months from the date of termination of
336     employment, the member is considered to have been in service at the member's last rate of pay
337     from the date of the termination of employment to the effective date of retirement for purposes

338     of computing the member's final average salary only.
339          (d) If the member has less than five years of service credit in this system, final average
340     salary means the average annual compensation paid to the member during the full period of
341     service credit.
342          (5) "Participating employer" means an employer which meets the participation
343     requirements of:
344          (a) Sections 49-12-201 and 49-12-202;
345          (b) Sections 49-13-201 and 49-13-202;
346          (c) Section 49-19-201; or
347          (d) Section 49-22-201 or 49-22-202.
348          (6) (a) "Regular full-time employee" means an employee whose term of employment
349     for a participating employer contemplates continued employment during a fiscal or calendar
350     year and whose employment normally requires an average of 20 hours or more per week,
351     except as modified by the board, and who receives benefits normally provided by the
352     participating employer.
353          (b) "Regular full-time employee" includes:
354          (i) a teacher whose term of employment for a participating employer contemplates
355     continued employment during a school year and who teaches half time or more;
356          (ii) a classified school employee:
357          (A) who is hired before July 1, 2013; and
358          (B) whose employment normally requires an average of 20 hours per week or more for
359     a participating employer, regardless of benefits provided;
360          (iii) an appointive officer whose appointed position is full time as certified by the
361     participating employer;
362          (iv) the governor, the lieutenant governor, the state auditor, the state treasurer, the
363     attorney general, and a state legislator;
364          (v) an elected official not included under Subsection (6)(b)(iv) whose elected position
365     is full time as certified by the participating employer;
366          (vi) a faculty member or employee of an institution of higher education who is
367     considered full time by that institution of higher education; and
368          (vii) an individual who otherwise meets the definition of this Subsection (6) who

369     performs services for a participating employer through a professional employer organization or
370     similar arrangement.
371          (c) "Regular full-time employee" does not include:
372          (i) a firefighter service employee as defined in Section 49-23-102;
373          (ii) a public safety service employee as defined in Section 49-23-102;
374          (iii) a classified school employee:
375          (A) who is hired on or after July 1, 2013; and
376          (B) who does not receive benefits normally provided by the participating employer
377     even if the employment normally requires an average of 20 hours per week or more for a
378     participating employer; [or]
379          (iv) a classified school employee:
380          (A) who is hired before July 1, 2013;
381          (B) who did not qualify as a regular full-time employee before July 1, 2013;
382          (C) who does not receive benefits normally provided by the participating employer;
383     and
384          (D) whose employment hours are increased on or after July 1, 2013, to require an
385     average of 20 hours per week or more for a participating employer[.]; or
386          (E) who is a person working on a contract:
387          (I) for the purposes of vocational rehabilitation and the employment and training of
388     people with significant disabilities; and
389          (II) that has been set aside from procurement requirements by the state pursuant to
390     Section 63G-6a-805 or the federal government pursuant to 41 U.S.C. Sec. 8501 et seq.
391          (7) "System" means the New Public Employees' Tier II Contributory Retirement
392     System created under this chapter.
393          (8) "Years of service credit" means:
394          (a) a period consisting of 12 full months as determined by the board;
395          (b) a period determined by the board, whether consecutive or not, during which a
396     regular full-time employee performed services for a participating employer, including any time
397     the regular full-time employee was absent on a paid leave of absence granted by a participating
398     employer or was absent in the service of the United States government on military duty as
399     provided by this chapter; or

400          (c) the regular school year consisting of not less than eight months of full-time service
401     for a regular full-time employee of an educational institution.
402          Section 5. Effective date.
403          Ŝ→ (1) [
If] Except as provided in Subsection (2), if ←Ŝ approved by two-thirds of all the
403a     members elected to each house, this bill takes effect
404     upon approval by the governor, or the day following the constitutional time limit of Utah
405     Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
406     the date of veto override.
406a     Ŝ→      (2) The amendments to Section 49-11-301 in this bill take effect on July 1, 2016. ←Ŝ






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