1     
HIGHER EDUCATION RETIREMENT AMENDMENTS

2     
2017 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: John R. Westwood

5     
Senate Sponsor: Evan J. Vickers

6     

7     LONG TITLE
8     General Description:
9          This bill modifies the Utah State Retirement and Insurance Benefit Act by amending
10     provisions relating to higher education retirement participation.
11     Highlighted Provisions:
12          This bill:
13          ▸     provides definitions;
14          ▸     provides that the Board of Directors of each applied technology college, rather than
15     the State Board of Regents, shall designate the public or private retirement systems,
16     organizations, or companies that a regular full-time employee of each applied
17     technology college is eligible to participate in under certain retirement systems or
18     plans; and
19          ▸     makes technical and conforming changes.
20     Money Appropriated in this Bill:
21          None
22     Other Special Clauses:
23          This bill provides a special effective date.
24     Utah Code Sections Affected:
25     AMENDS:
26          49-11-102, as last amended by Laws of Utah 2016, Chapters 84 and 310
27          49-12-203, as last amended by Laws of Utah 2015, Chapters 315 and 364
28          49-12-204, as last amended by Laws of Utah 2014, Chapter 15
29          49-13-203, as last amended by Laws of Utah 2015, Chapters 315 and 364
30          49-13-204, as last amended by Laws of Utah 2014, Chapter 15
31          49-22-203, as last amended by Laws of Utah 2015, Chapters 315 and 364
32          49-22-204, as last amended by Laws of Utah 2014, Chapter 15
33     

34     Be it enacted by the Legislature of the state of Utah:
35          Section 1. Section 49-11-102 is amended to read:
36          49-11-102. Definitions.
37          As used in this title:
38          (1) (a) "Active member" means a member who:
39          (i) is employed by a participating employer and accruing service credit; or
40          (ii) within the previous 120 days:
41          (A) has been employed by a participating employer; and
42          (B) accrued service credit.
43          (b) "Active member" does not include a retiree.
44          (2) "Actuarial equivalent" means a benefit of equal value when computed upon the
45     basis of mortality tables as recommended by the actuary and adopted by the executive director,
46     including regular interest.
47          (3) "Actuarial interest rate" means the interest rate as recommended by the actuary and
48     adopted by the board upon which the funding of system costs and benefits are computed.
49          (4) (a) "Agency" means:
50          (i) a department, division, agency, office, authority, commission, board, institution, or
51     hospital of the state;
52          (ii) a county, municipality, school district, local district, or special service district;
53          (iii) a state college or university; or
54          (iv) any other participating employer.
55          (b) "Agency" does not include an entity listed under Subsection (4)(a)(i) that is a
56     subdivision of another entity listed under Subsection (4)(a).
57          (5) "Allowance" or "retirement allowance" means the pension plus the annuity,
58     including any cost of living or other authorized adjustments to the pension and annuity.
59          (6) "Alternate payee" means a member's former spouse or family member eligible to
60     receive payments under a Domestic Relations Order in compliance with Section 49-11-612.
61          (7) "Amortization rate" means the board certified percent of salary required to amortize
62     the unfunded actuarial accrued liability in accordance with policies established by the board
63     upon the advice of the actuary.
64          (8) "Annuity" means monthly payments derived from member contributions.
65          (9) "Applied technology college" means the same as that term is defined in Section
66     53B-2a-101.
67          [(9)] (10) "Appointive officer" means an employee appointed to a position for a
68     definite and fixed term of office by official and duly recorded action of a participating
69     employer whose appointed position is designated in the participating employer's charter,
70     creation document, or similar document, and:
71          (a) who earns $500 or more per month, indexed as of January 1, 1990, as provided in
72     Section 49-12-407 for a Tier I appointive officer; and
73          (b) whose appointive position is full-time as certified by the participating employer for
74     a Tier II appointive officer.
75          [(10)] (11) (a) "At-will employee" means a person who is employed by a participating
76     employer and:
77          (i) who is not entitled to merit or civil service protection and is generally considered
78     exempt from a participating employer's merit or career service personnel systems;
79          (ii) whose on-going employment status is entirely at the discretion of the person's
80     employer; or
81          (iii) who may be terminated without cause by a designated supervisor, manager, or
82     director.
83          (b) "At-will employee" does not include a career employee who has obtained a
84     reasonable expectation of continued employment based on inclusion in a participating
85     employer's merit system, civil service protection system, or career service personnel systems,
86     policies, or plans.
87          [(11)] (12) "Beneficiary" means any person entitled to receive a payment under this
88     title through a relationship with or designated by a member, participant, covered individual, or
89     alternate payee of a defined contribution plan.
90          [(12)] (13) "Board" means the Utah State Retirement Board established under Section
91     49-11-202.
92          [(13)] (14) "Board member" means a person serving on the Utah State Retirement
93     Board as established under Section 49-11-202.
94          (15) "Board of Regents" or "State Board of Regents" means the State Board of Regents
95     established in Section 53B-1-103.
96          [(14)] (16) "Certified contribution rate" means the board certified percent of salary paid
97     on behalf of an active member to the office to maintain the system on a financially and
98     actuarially sound basis.
99          [(15)] (17) "Contributions" means the total amount paid by the participating employer
100     and the member into a system or to the Utah Governors' and Legislators' Retirement Plan under
101     Chapter 19, Utah Governors' and Legislators' Retirement Act.
102          [(16)] (18) "Council member" means a person serving on the Membership Council
103     established under Section 49-11-202.
104          [(17)] (19) "Covered individual" means any individual covered under Chapter 20,
105     Public Employees' Benefit and Insurance Program Act.
106          [(18)] (20) "Current service" means covered service under:
107          (a) Chapter 12, Public Employees' Contributory Retirement Act;
108          (b) Chapter 13, Public Employees' Noncontributory Retirement Act;
109          (c) Chapter 14, Public Safety Contributory Retirement Act;
110          (d) Chapter 15, Public Safety Noncontributory Retirement Act;
111          (e) Chapter 16, Firefighters' Retirement Act;
112          (f) Chapter 17, Judges' Contributory Retirement Act;
113          (g) Chapter 18, Judges' Noncontributory Retirement Act;
114          (h) Chapter 19, Utah Governors' and Legislators' Retirement Act;
115          (i) Chapter 22, New Public Employees' Tier II Contributory Retirement Act; or
116          (j) Chapter 23, New Public Safety and Firefighter Tier II Contributory Retirement Act.
117          [(19)] (21) "Defined benefit" or "defined benefit plan" or "defined benefit system"
118     means a system or plan offered under this title to provide a specified allowance to a retiree or a
119     retiree's spouse after retirement that is based on a set formula involving one or more of the
120     following factors:
121          (a) years of service;
122          (b) final average monthly salary; or
123          (c) a retirement multiplier.
124          [(20)] (22) "Defined contribution" or "defined contribution plan" means any defined
125     contribution plan or deferred compensation plan authorized under the Internal Revenue Code
126     and administered by the board.
127          [(21)] (23) "Educational institution" means a political subdivision or instrumentality of
128     the state or a combination thereof primarily engaged in educational activities or the
129     administration or servicing of educational activities, including:
130          (a) the State Board of Education and its instrumentalities;
131          (b) any institution of higher education and its branches;
132          (c) any school district and its instrumentalities;
133          (d) any vocational and technical school; and
134          (e) any entity arising out of a consolidation agreement between entities described under
135     this Subsection [(21)] (23).
136          [(22)] (24) "Elected official":
137          (a) means a person elected to a state office, county office, municipal office, school
138     board or school district office, local district office, or special service district office;
139          (b) includes a person who is appointed to serve an unexpired term of office described
140     under Subsection [(22)] (24)(a); and
141          (c) does not include a judge or justice who is subject to a retention election under
142     Section 20A-12-201.
143          [(23)] (25) (a) "Employer" means any department, educational institution, or political
144     subdivision of the state eligible to participate in a government-sponsored retirement system
145     under federal law.
146          (b) "Employer" may also include an agency financed in whole or in part by public
147     funds.
148          [(24)] (26) "Exempt employee" means an employee working for a participating
149     employer:
150          (a) who is not eligible for service credit under Section 49-12-203, 49-13-203,
151     49-14-203, 49-15-203, or 49-16-203; and
152          (b) for whom a participating employer is not required to pay contributions or
153     nonelective contributions.
154          [(25)] (27) "Final average monthly salary" means the amount computed by dividing the
155     compensation received during the final average salary period under each system by the number
156     of months in the final average salary period.
157          [(26)] (28) "Fund" means any fund created under this title for the purpose of paying
158     benefits or costs of administering a system, plan, or program.
159          [(27)] (29) (a) "Inactive member" means a member who has not been employed by a
160     participating employer for a period of at least 120 days.
161          (b) "Inactive member" does not include retirees.
162          [(28)] (30) (a) "Initially entering" means hired, appointed, or elected for the first time,
163     in current service as a member with any participating employer.
164          (b) "Initially entering" does not include a person who has any prior service credit on
165     file with the office.
166          (c) "Initially entering" includes an employee of a participating employer, except for an
167     employee that is not eligible under a system or plan under this title, who:
168          (i) does not have any prior service credit on file with the office;
169          (ii) is covered by a retirement plan other than a retirement plan created under this title;
170     and
171          (iii) moves to a position with a participating employer that is covered by this title.
172          [(29)] (31) "Institution of higher education" means an institution described in Section
173     53B-1-102.
174          [(30)] (32) (a) "Member" means a person, except a retiree, with contributions on
175     deposit with a system, the Utah Governors' and Legislators' Retirement Plan under Chapter 19,
176     Utah Governors' and Legislators' Retirement Act, or with a terminated system.
177          (b) "Member" also includes leased employees within the meaning of Section 414(n)(2)
178     of the Internal Revenue Code, if the employees have contributions on deposit with the office.
179     If leased employees constitute less than 20% of the participating employer's work force that is
180     not highly compensated within the meaning of Section 414(n)(5)(c)(ii), Internal Revenue Code,
181     "member" does not include leased employees covered by a plan described in Section 414(n)(5)
182     of the federal Internal Revenue Code.
183          [(31)] (33) "Member contributions" means the sum of the contributions paid to a
184     system or the Utah Governors' and Legislators' Retirement Plan, including refund interest if
185     allowed by a system, and which are made by:
186          (a) the member; and
187          (b) the participating employer on the member's behalf under Section 414(h) of the
188     Internal Revenue Code.
189          [(32)] (34) "Nonelective contribution" means an amount contributed by a participating
190     employer into a participant's defined contribution account.
191          [(33)] (35) "Normal cost rate":
192          (a) means the percent of salary that is necessary for a retirement system that is fully
193     funded to maintain its fully funded status; and
194          (b) is determined by the actuary based on the assumed rate of return established by the
195     board.
196          [(34)] (36) "Office" means the Utah State Retirement Office.
197          [(35)] (37) "Participant" means an individual with voluntary deferrals or nonelective
198     contributions on deposit with the defined contribution plans administered under this title.
199          [(36)] (38) "Participating employer" means a participating employer, as defined by
200     Chapter 12, Public Employees' Contributory Retirement Act, Chapter 13, Public Employees'
201     Noncontributory Retirement Act, Chapter 14, Public Safety Contributory Retirement Act,
202     Chapter 15, Public Safety Noncontributory Retirement Act, Chapter 16, Firefighters'
203     Retirement Act, Chapter 17, Judges' Contributory Retirement Act, and Chapter 18, Judges'
204     Noncontributory Retirement Act, or an agency financed in whole or in part by public funds
205     which is participating in a system or plan as of January 1, 2002.
206          [(37)] (39) "Part-time appointed board member" means a person:
207          (a) who is appointed to serve as a member of a board, commission, council, committee,
208     or panel of a participating employer; and
209          (b) whose service as a part-time appointed board member does not qualify as a regular
210     full-time employee as defined under Section 49-12-102, 49-13-102, or 49-22-102.
211          [(38)] (40) "Pension" means monthly payments derived from participating employer
212     contributions.
213          [(39)] (41) "Plan" means the Utah Governors' and Legislators' Retirement Plan created
214     by Chapter 19, Utah Governors' and Legislators' Retirement Act, the New Public Employees'
215     Tier II Defined Contribution Plan created by Chapter 22, Part 4, Tier II Defined Contribution
216     Plan, the New Public Safety and Firefighter Tier II Defined Contribution Plan created by
217     Chapter 23, Part 4, Tier II Defined Contribution Plan, or the defined contribution plans created
218     under Section 49-11-801.
219          [(40)] (42) (a) "Political subdivision" means any local government entity, including
220     cities, towns, counties, and school districts, but only if the subdivision is a juristic entity that is
221     legally separate and distinct from the state and only if its employees are not by virtue of their
222     relationship to the entity employees of the state.
223          (b) "Political subdivision" includes local districts, special service districts, or
224     authorities created by the Legislature or by local governments, including the office.
225          (c) "Political subdivision" does not include a project entity created under Title 11,
226     Chapter 13, Interlocal Cooperation Act, that was formed prior to July 1, 1987.
227          [(41)] (43) "Program" means the Public Employees' Insurance Program created under
228     Chapter 20, Public Employees' Benefit and Insurance Program Act, or the Public Employees'
229     Long-Term Disability program created under Chapter 21, Public Employees' Long-Term
230     Disability Act.
231          [(42)] (44) "Public funds" means those funds derived, either directly or indirectly, from
232     public taxes or public revenue, dues or contributions paid or donated by the membership of the
233     organization, used to finance an activity whose objective is to improve, on a nonprofit basis,
234     the governmental, educational, and social programs and systems of the state or its political
235     subdivisions.
236          [(43)] (45) "Qualified defined contribution plan" means a defined contribution plan
237     that meets the requirements of Section 401(k) or Section 403(b) of the Internal Revenue Code.
238          [(44)] (46) "Refund interest" means the amount accrued on member contributions at a
239     rate adopted by the board.
240          [(45)] (47) "Retiree" means an individual who has qualified for an allowance under this
241     title.
242          [(46)] (48) "Retirement" means the status of an individual who has become eligible,
243     applies for, and is entitled to receive an allowance under this title.
244          [(47)] (49) "Retirement date" means the date selected by the member on which the
245     member's retirement becomes effective with the office.
246          [(48)] (50) "Retirement related contribution":
247          (a) means any employer payment to any type of retirement plan or program made on
248     behalf of an employee; and
249          (b) does not include Social Security payments or Social Security substitute payments
250     made on behalf of an employee.
251          [(49)] (51) "Service credit" means:
252          (a) the period during which an employee is employed and compensated by a
253     participating employer and meets the eligibility requirements for membership in a system or the
254     Utah Governors' and Legislators' Retirement Plan, provided that any required contributions are
255     paid to the office; and
256          (b) periods of time otherwise purchasable under this title.
257          [(50)] (52) "Surviving spouse" means:
258          (a) the lawful spouse who has been married to a member for at least six months
259     immediately before the death date of the member; or
260          (b) a former lawful spouse of a member with a valid domestic relations order benefits
261     on file with the office before the member's death date in accordance with Section 49-11-612.
262          [(51)] (53) "System" means the individual retirement systems created by Chapter 12,
263     Public Employees' Contributory Retirement Act, Chapter 13, Public Employees'
264     Noncontributory Retirement Act, Chapter 14, Public Safety Contributory Retirement Act,
265     Chapter 15, Public Safety Noncontributory Retirement Act, Chapter 16, Firefighters'
266     Retirement Act, Chapter 17, Judges' Contributory Retirement Act, Chapter 18, Judges'
267     Noncontributory Retirement Act, and Chapter 19, Utah Governors' and Legislators' Retirement
268     Act, the defined benefit portion of the Tier II Hybrid Retirement System under Chapter 22, Part
269     3, Tier II Hybrid Retirement System, and the defined benefit portion of the Tier II Hybrid
270     Retirement System under Chapter 23, Part 3, Tier II Hybrid Retirement System.
271          [(52)] (54) "Tier I" means a system or plan under this title for which:
272          (a) an employee is eligible to participate if the employee initially enters regular
273     full-time employment before July 1, 2011; or
274          (b) a governor or legislator who initially enters office before July 1, 2011.
275          [(53)] (55) (a) "Tier II" means a system or plan under this title provided in lieu of a
276     Tier I system or plan for an employee, governor, legislator, or full-time elected official who
277     does not have Tier I service credit in a system or plan under this title:
278          (i) if the employee initially enters regular full-time employment on or after July 1,
279     2011; or
280          (ii) if the governor, legislator, or full-time elected official initially enters office on or
281     after July 1, 2011.
282          (b) "Tier II" includes:
283          (i) the Tier II hybrid system established under:
284          (A) Chapter 22, Part 3, Tier II Hybrid Retirement System; or
285          (B) Chapter 23, Part 3, Tier II Hybrid Retirement System; and
286          (ii) the Tier II Defined Contribution Plan (Tier II DC Plan) established under:
287          (A) Chapter 22, Part 4, Tier II Defined Contribution Plan; or
288          (B) Chapter 23, Part 4, Tier II Defined Contribution Plan.
289          [(54)] (56) "Unfunded actuarial accrued liability" or "UAAL":
290          (a) is determined by the system's actuary; and
291          (b) means the excess, if any, of the accrued liability of a retirement system over the
292     actuarial value of its assets.
293          [(55)] (57) "Voluntary deferrals" means an amount contributed by a participant into
294     that participant's defined contribution account.
295          Section 2. Section 49-12-203 is amended to read:
296          49-12-203. Exclusions from membership in system.
297          (1) The following employees are not eligible for service credit in this system:
298          (a) subject to the requirements of Subsection (2), an employee whose employment
299     status is temporary in nature due to the nature or the type of work to be performed;
300          (b) except as provided under Subsection (3)(a), an employee of an institution of higher
301     education who participates in a retirement system with a public or private retirement system,
302     organization, or company designated by the State Board of Regents, or the Board of Directors
303     of each applied technology college for an employee of each applied technology college, during
304     any period in which required contributions based on compensation have been paid on behalf of
305     the employee by the employer;
306          (c) an employee serving as an exchange employee from outside the state;
307          (d) an executive department head of the state, a member of the State Tax Commission,
308     the Public Service Commission, and a member of a full-time or part-time board or commission
309     who files a formal request for exemption;
310          (e) an employee of the Department of Workforce Services who is covered under
311     another retirement system allowed under Title 35A, Chapter 4, Employment Security Act;
312          (f) an employee who is employed on or after July 1, 2009, with an employer that has
313     elected, prior to July 1, 2009, to be excluded from participation in this system under Subsection
314     49-12-202(2)(c);
315          (g) an employee who is employed on or after July 1, 2014, with an employer that has
316     elected, prior to July 1, 2014, to be excluded from participation in this system under Subsection
317     49-12-202(2)(d); or
318          (h) an employee who is employed with a withdrawing entity that has elected, prior to
319     January 1, 2017, to exclude:
320          (i) new employees from participation in this system under Subsection 49-11-623(3)(a);
321     or
322          (ii) all employees from participation in this system under Subsection 49-11-623(3)(b).
323          (2) If an employee whose status is temporary in nature due to the nature of type of
324     work to be performed:
325          (a) is employed for a term that exceeds six months and the employee otherwise
326     qualifies for service credit in this system, the participating employer shall report and certify to
327     the office that the employee is a regular full-time employee effective the beginning of the
328     seventh month of employment; or
329          (b) was previously terminated prior to being eligible for service credit in this system
330     and is reemployed within three months of termination by the same participating employer, the
331     participating employer shall report and certify that the member is a regular full-time employee
332     when the total of the periods of employment equals six months and the employee otherwise
333     qualifies for service credits in this system.
334          (3) (a) Upon cessation of the participating employer contributions, an employee under
335     Subsection (1)(b) is eligible for service credit in this system.
336          (b) Notwithstanding the provisions of Subsection (1)(f), any eligibility for service
337     credit earned by an employee under this chapter before July 1, 2009 is not affected under
338     Subsection (1)(f).
339          (c) Notwithstanding the provisions of Subsection (1)(g), any eligibility for service
340     credit earned by an employee under this chapter before July 1, 2014, is not affected under
341     Subsection (1)(g).
342          (4) Upon filing a written request for exemption with the office, the following
343     employees shall be exempt from coverage under this system:
344          (a) a full-time student or the spouse of a full-time student and individuals employed in
345     a trainee relationship;
346          (b) an elected official;
347          (c) an executive department head of the state, a member of the State Tax Commission,
348     a member of the Public Service Commission, and a member of a full-time or part-time board or
349     commission;
350          (d) an employee of the Governor's Office of Management and Budget;
351          (e) an employee of the Governor's Office of Economic Development;
352          (f) an employee of the Commission on Criminal and Juvenile Justice;
353          (g) an employee of the Governor's Office;
354          (h) an employee of the State Auditor's Office;
355          (i) an employee of the State Treasurer's Office;
356          (j) any other member who is permitted to make an election under Section 49-11-406;
357          (k) a person appointed as a city manager or chief city administrator or another person
358     employed by a municipality, county, or other political subdivision, who is an at-will employee;
359     and
360          (l) an employee of an interlocal cooperative agency created under Title 11, Chapter 13,
361     Interlocal Cooperation Act, who is engaged in a specialized trade customarily provided through
362     membership in a labor organization that provides retirement benefits to its members.
363          (5) (a) Each participating employer shall prepare a list designating those positions
364     eligible for exemption under Subsection (4).
365          (b) An employee may not be exempted unless the employee is employed in an
366     exempted position designated by the participating employer.
367          (6) (a) In accordance with this section, Section 49-13-203, and Section 49-22-205, a
368     municipality, county, or political subdivision may not exempt a total of more than 50 positions
369     or a number equal to 10% of the employees of the municipality, county, or political
370     subdivision, whichever is less.
371          (b) A municipality, county, or political subdivision may exempt at least one regular
372     full-time employee.
373          (7) Each participating employer shall:
374          (a) file employee exemptions annually with the office; and
375          (b) update the employee exemptions in the event of any change.
376          (8) The office may make rules to implement this section.
377          Section 3. Section 49-12-204 is amended to read:
378          49-12-204. Higher education employees' eligibility requirements -- Election
379     between different retirement plans -- Classification requirements -- Transfer between
380     systems -- One-time election window -- Rulemaking.
381          (1) (a) A regular full-time employee of an institution of higher education who is
382     eligible to participate in either this system or a public or private retirement system,
383     organization, or company, designated [by the Board of Regents] as described in Subsection
384     (1)(c) or (d), shall, not later than January 1, 1979, elect to participate exclusively in this system
385     or in an annuity contract allowed under this Subsection (1).
386          (b) The election is final, and no right exists to make any further election.
387          (c) Except as provided in Subsection (1)(d), the Board of Regents shall designate the
388     public or private retirement systems, organizations, or companies that a regular full-time
389     employee of an institution of higher education is eligible to participate in under Subsection
390     (1)(a).
391          (d) The Board of Directors of each applied technology college shall designate the
392     public or private retirement systems, organizations, or companies that a regular full-time
393     employee of each applied technology college is eligible to participate in under Subsection
394     (1)(a).
395          (2) (a) Except as provided under Subsection (2)(c), a regular full-time employee hired
396     by an institution of higher education after January 1, 1979, may participate only in the
397     retirement plan which attaches to the person's employment classification.
398          (b) Each institution of higher education shall prepare or amend existing employment
399     classifications, under the direction of the Board of Regents, or the Board of Directors of each
400     applied technology college for each applied technology college, so that each classification is
401     assigned with either:
402          (i) this system; or
403          (ii) a public or private system, organization, or company designated by:
404          (A) except as provided in Subsection (2)(b)(ii)(B), the Board of Regents; or
405          (B) the Board of Directors of each applied technology college for regular full-time
406     employees of each applied technology college.
407          (c) Notwithstanding a person's employment classification assignment under Subsection
408     (2)(b), a regular full-time employee who begins employment with an institution of higher
409     education on or after May 11, 2010, has a one-time irrevocable election to continue
410     participation in this system, if the employee has service credit in this system before the date of
411     employment.
412          (3) Notwithstanding an employment classification assignment change made under
413     Subsection (2)(b), a regular full-time employee hired by an institution of higher education after
414     January 1, 1979, whose employment classification requires participation in this system may
415     elect to continue participation in this system.
416          (4) A regular full-time employee hired by an institution of higher education after
417     January 1, 1979, whose employment classification requires participation in this system shall
418     participate in this system.
419          (5) (a) Notwithstanding any other provision of this section, a regular full-time
420     employee of an institution of higher education shall have a one-time irrevocable election to
421     participate in this system if the employee:
422          (i) was hired after January 1, 1979;
423          (ii) whose employment classification assignment under Subsection (2)(b) required
424     participation in a retirement program other than this system; and
425          (iii) has service credit in a system under this title.
426          (b) The election under Subsection (5)(a) shall be made before June 30, 2010.
427          (c) All forms required by the office must be completed and received by the office no
428     later than June 30, 2010, for the election to participate in this system to be effective.
429          (d) Beginning July 1, 2010, a regular full-time employee of an institution of higher
430     education who elects to be covered by this system under Subsection (5)(a) may begin to accrue
431     service credit in this system.
432          (6) A regular full-time employee of an institution of higher education who elects to be
433     covered by this system under Subsection (2)(c) or (5)(a), may purchase periods of employment
434     while covered under another retirement program sponsored by the institution of higher
435     education by complying with the requirements of Section 49-11-403.
436          (7) The board shall make rules to implement this section.
437          Section 4. Section 49-13-203 is amended to read:
438          49-13-203. Exclusions from membership in system.
439          (1) The following employees are not eligible for service credit in this system:
440          (a) subject to the requirements of Subsection (2), an employee whose employment
441     status is temporary in nature due to the nature or the type of work to be performed;
442          (b) except as provided under Subsection (3)(a), an employee of an institution of higher
443     education who participates in a retirement system with a public or private retirement system,
444     organization, or company designated by the State Board of Regents, or the Board of Directors
445     of each applied technology college for an employee of each applied technology college, during
446     any period in which required contributions based on compensation have been paid on behalf of
447     the employee by the employer;
448          (c) an employee serving as an exchange employee from outside the state;
449          (d) an executive department head of the state or a legislative director, senior executive
450     employed by the governor's office, a member of the State Tax Commission, a member of the
451     Public Service Commission, and a member of a full-time or part-time board or commission
452     who files a formal request for exemption;
453          (e) an employee of the Department of Workforce Services who is covered under
454     another retirement system allowed under Title 35A, Chapter 4, Employment Security Act;
455          (f) an employee who is employed with an employer that has elected to be excluded
456     from participation in this system under Subsection 49-13-202(5), effective on or after the date
457     of the employer's election under Subsection 49-13-202(5); or
458          (g) an employee who is employed with a withdrawing entity that has elected, prior to
459     January 1, 2017, to exclude:
460          (i) new employees from participation in this system under Subsection 49-11-623(3)(a);
461     or
462          (ii) all employees from participation in this system under Subsection 49-11-623(3)(b).
463          (2) If an employee whose status is temporary in nature due to the nature of type of
464     work to be performed:
465          (a) is employed for a term that exceeds six months and the employee otherwise
466     qualifies for service credit in this system, the participating employer shall report and certify to
467     the office that the employee is a regular full-time employee effective the beginning of the
468     seventh month of employment; or
469          (b) was previously terminated prior to being eligible for service credit in this system
470     and is reemployed within three months of termination by the same participating employer, the
471     participating employer shall report and certify that the member is a regular full-time employee
472     when the total of the periods of employment equals six months and the employee otherwise
473     qualifies for service credits in this system.
474          (3) (a) Upon cessation of the participating employer contributions, an employee under
475     Subsection (1)(b) is eligible for service credit in this system.
476          (b) Notwithstanding the provisions of Subsection (1)(f), any eligibility for service
477     credit earned by an employee under this chapter before the date of the election under
478     Subsection 49-13-202(5) is not affected under Subsection (1)(f).
479          (4) Upon filing a written request for exemption with the office, the following
480     employees shall be exempt from coverage under this system:
481          (a) a full-time student or the spouse of a full-time student and individuals employed in
482     a trainee relationship;
483          (b) an elected official;
484          (c) an executive department head of the state, a member of the State Tax Commission,
485     a member of the Public Service Commission, and a member of a full-time or part-time board or
486     commission;
487          (d) an employee of the Governor's Office of Management and Budget;
488          (e) an employee of the Governor's Office of Economic Development;
489          (f) an employee of the Commission on Criminal and Juvenile Justice;
490          (g) an employee of the Governor's Office;
491          (h) an employee of the State Auditor's Office;
492          (i) an employee of the State Treasurer's Office;
493          (j) any other member who is permitted to make an election under Section 49-11-406;
494          (k) a person appointed as a city manager or chief city administrator or another person
495     employed by a municipality, county, or other political subdivision, who is an at-will employee;
496          (l) an employee of an interlocal cooperative agency created under Title 11, Chapter 13,
497     Interlocal Cooperation Act, who is engaged in a specialized trade customarily provided through
498     membership in a labor organization that provides retirement benefits to its members; and
499          (m) an employee of the Utah Science Technology and Research Initiative created under
500     Title 63M, Chapter 2, Utah Science Technology and Research Governing Authority Act.
501          (5) (a) Each participating employer shall prepare a list designating those positions
502     eligible for exemption under Subsection (4).
503          (b) An employee may not be exempted unless the employee is employed in a position
504     designated by the participating employer.
505          (6) (a) In accordance with this section, Section 49-12-203, and Section 49-22-205, a
506     municipality, county, or political subdivision may not exempt a total of more than 50 positions
507     or a number equal to 10% of the employees of the municipality, county, or political
508     subdivision, whichever is less.
509          (b) A municipality, county, or political subdivision may exempt at least one regular
510     full-time employee.
511          (7) Each participating employer shall:
512          (a) file employee exemptions annually with the office; and
513          (b) update the employee exemptions in the event of any change.
514          (8) The office may make rules to implement this section.
515          Section 5. Section 49-13-204 is amended to read:
516          49-13-204. Higher education employees' eligibility requirements -- Election
517     between different retirement plans -- Classification requirements -- Transfer between
518     systems -- One-time election window -- Rulemaking.
519          (1) (a) A regular full-time employee of an institution of higher education who is
520     eligible to participate in either this system or in a retirement system with a public or private
521     retirement system, organization, or company, designated [by the Board of Regents] as
522     described in Subsection (1)(c) or (d), shall, not later than January 1, 1979, elect to participate
523     exclusively in this system or in an annuity contract allowed under this Subsection (1)(a).
524          (b) The election is final, and no right exists to make any further election.
525          (c) Except as provided in Subsection (1)(d), the Board of Regents shall designate the
526     public or private retirement systems, organizations, or companies that a regular full-time
527     employee of an institution of higher education is eligible to participate in under Subsection
528     (1)(a).
529          (d) The Board of Directors of each applied technology college shall designate the
530     public or private retirement systems, organizations, or companies that a regular full-time
531     employee of each applied technology college is eligible to participate in under Subsection
532     (1)(a).
533          (2) (a) Except as provided under Subsection (2)(c), a regular full-time employee hired
534     by an institution of higher education after January 1, 1979, may participate only in the
535     retirement plan which attaches to the person's employment classification.
536          (b) Each institution of higher education shall prepare or amend existing employment
537     classifications, under the direction of the Board of Regents, or the Board of Directors of each
538     applied technology college for regular full-time employees of each applied technology college,
539     so that each classification is assigned with either:
540          (i) this system; or
541          (ii) a public or private system, organization, or company designated by:
542          (A) except as provided in Subsection (2)(b)(ii)(B), the Board of Regents[.]; or
543          (B) the Board of Directors of each applied technology college for regular full-time
544     employees of each applied technology college.
545          (c) Notwithstanding a person's employment classification assignment under Subsection
546     (2)(b), a regular full-time employee who begins employment with an institution of higher
547     education on or after May 11, 2010, has a one-time irrevocable election to continue
548     participation in this system, if the employee has service credit in this system before the date of
549     employment.
550          (3) Notwithstanding an employment classification assignment change made under
551     Subsection (2)(b), a regular full-time employee hired by an institution of higher education after
552     January 1, 1979, whose employment classification requires participation in this system may
553     elect to continue participation in this system.
554          (4) A regular full-time employee hired by an institution of higher education after
555     January 1, 1979, whose employment classification requires participation in this system shall
556     participate in this system.
557          (5) (a) Notwithstanding any other provision of this section, a regular full-time
558     employee of an institution of higher education whose employment classification assignment
559     under Subsection (2)(b) required participation in a retirement program other than this system
560     shall have a one-time irrevocable election to participate in this system.
561          (b) The election under Subsection (5)(a) shall be made before June 30, 2010.
562          (c) All forms required by the office must be completed and received by the office no
563     later than June 30, 2010, for the election to participate in this system to be effective.
564          (d) Beginning July 1, 2010, a regular full-time employee of an institution of higher
565     education who elects to be covered by this system under Subsection (5)(a) may begin to accrue
566     service credit in this system.
567          (6) A regular full-time employee of an institution of higher education who elects to be
568     covered by this system under Subsection (2)(c) or (5)(a) may purchase periods of employment
569     while covered under another retirement program by complying with the requirements of
570     Section 49-11-403.
571          (7) The board shall make rules to implement this section.
572          Section 6. Section 49-22-203 is amended to read:
573          49-22-203. Exclusions from membership in system.
574          (1) The following employees are not eligible for service credit in this system:
575          (a) subject to the requirements of Subsection (2), an employee whose employment
576     status is temporary in nature due to the nature or the type of work to be performed;
577          (b) except as provided under Subsection (3), an employee of an institution of higher
578     education who participates in a retirement system with a public or private retirement system,
579     organization, or company designated by the State Board of Regents, or the Board of Directors
580     of each applied technology college for an employee of each applied technology college, during
581     any period in which required contributions based on compensation have been paid on behalf of
582     the employee by the employer;
583          (c) an employee serving as an exchange employee from outside the state;
584          (d) an employee of the Department of Workforce Services who is covered under
585     another retirement system allowed under Title 35A, Chapter 4, Employment Security Act;
586          (e) an employee who is employed with a withdrawing entity that has elected, prior to
587     January 1, 2017, to exclude:
588          (i) new employees from participation in this system under Subsection 49-11-623(3)(a);
589     or
590          (ii) all employees from participation in this system under Subsection 49-11-623(3)(b);
591     or
592          (f) a person who files a written request for exemption with the office under Section
593     49-22-205.
594          (2) If an employee whose status is temporary in nature due to the nature of type of
595     work to be performed:
596          (a) is employed for a term that exceeds six months and the employee otherwise
597     qualifies for service credit in this system, the participating employer shall report and certify to
598     the office that the employee is a regular full-time employee effective the beginning of the
599     seventh month of employment; or
600          (b) was previously terminated prior to being eligible for service credit in this system
601     and is reemployed within three months of termination by the same participating employer, the
602     participating employer shall report and certify that the member is a regular full-time employee
603     when the total of the periods of employment equals six months and the employee otherwise
604     qualifies for service credits in this system.
605          (3) Upon cessation of the participating employer contributions, an employee under
606     Subsection (1)(b) is eligible for service credit in this system.
607          Section 7. Section 49-22-204 is amended to read:
608          49-22-204. Higher education employees' eligibility requirements -- Election
609     between different retirement plans -- Classification requirements -- Transfer between
610     systems.
611          (1) (a) A regular full-time [employees of institutions] employee of an institution of
612     higher education who [are] is eligible to participate in either this system or in a retirement
613     annuity contract with a public or private system, organization, or company, designated [by the
614     Board of Regents] as described in Subsection (1)(c) or (d), shall, not later than January 1, 1979,
615     elect to participate exclusively in this system or in an annuity contract allowed under this
616     Subsection (1)[(a)].
617          (b) The election is final, and no right exists to make any further election.
618          (c) Except as provided in Subsection (1)(d), the Board of Regents shall designate the
619     public or private retirement systems, organizations, or companies that a regular full-time
620     employee of an institution of higher education is eligible to participate in under Subsection
621     (1)(a).
622          (d) The Board of Directors of each applied technology college shall designate the
623     public or private retirement systems, organizations, or companies that a regular full-time
624     employee of each applied technology college is eligible to participate in under Subsection
625     (1)(a).
626          (2) (a) A regular full-time employee hired by an institution of higher education after
627     January 1, 1979, may participate only in the retirement plan which attaches to the person's
628     employment classification.
629          (b) Each institution of higher education shall prepare or amend existing employment
630     classifications, under the direction of the Board of Regents, or the Board of Directors of each
631     applied technology college for each applied technology college, so that each classification is
632     assigned with either:
633          (i) this system; or
634          (ii) a public or private system, organization, or company designated by:
635          (A) except as provided under Subsection (2)(b)(ii)(B), the Board of Regents; or
636          (B) the Board of Directors of each applied technology college for regular full-time
637     employees of each applied technology college.
638          (3) A regular full-time employee hired by an institution of higher education on or after
639     July 1, 2011, whose employment classification requires participation in this system may elect
640     to continue participation in this system upon change to an employment classification which
641     requires participation in a public or private system, organization, or company designated by:
642          (a) except as provided in Subsection (3)(b), the Board of Regents; or
643          (b) the Board of Directors of each applied technology college for regular full-time
644     employees of each applied technology college.
645          (4) A regular full-time employee hired by an institution of higher education on or after
646     July 1, 2011, whose employment classification requires participation in this system shall
647     participate in this system.
648          Section 8. Effective date.
649          If approved by two-thirds of all the members elected to each house, this bill takes effect
650     upon approval by the governor, or the day following the constitutional time limit of Utah
651     Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
652     the date of veto override.




Legislative Review Note
Office of Legislative Research and General Counsel