This document includes House Committee Amendments incorporated into the bill on Thu, Feb 27, 2020 at 8:34 AM by pflowers.
1     
PUBLIC EDUCATION RETIREMENT AMENDMENTS

2     
2020 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Craig Hall

5     
Senate Sponsor: Lyle W. Hillyard

6     

7     LONG TITLE
8     General Description:
9          This bill modifies provisions related to public education employees' retirement benefits.
10     Highlighted Provisions:
11          This bill:
12          ▸     provides an exception to the limitation provisions for calculating the final average
13     salary for members employed by a local education agency in the Public Employees'
14     Contributory Retirement System, the Public Employees' Noncontributory
15     Retirement System, and the New Public Employees' Tier II Contributory Retirement
16     System;
17          ▸     provides that the limitation for calculating the final average salary of a member
18     employed by a local education agency may be exceeded if:
19               •     the member has moved to a new position at the same local education agency due
20     to a program need; or
21               •     the percentage increase is due to a union-negotiated increase for a group of
22     members that includes the member.
23     Money Appropriated in this Bill:
24          None
25     Other Special Clauses:
26          None
27     Utah Code Sections Affected:

28     AMENDS:
29          49-12-102, as last amended by Laws of Utah 2018, Chapter 415
30          49-13-102, as last amended by Laws of Utah 2018, Chapter 415
31          49-22-102, as last amended by Laws of Utah 2018, Chapter 415
32     

33     Be it enacted by the Legislature of the state of Utah:
34          Section 1. Section 49-12-102 is amended to read:
35          49-12-102. Definitions.
36          As used in this chapter:
37          (1) "Benefits normally provided":
38          (a) means a benefit offered by an employer, including:
39          (i) a leave benefit of any kind;
40          (ii) insurance coverage of any kind if the employer pays some or all of the premium for
41     the coverage;
42          (iii) employer contributions to a health savings account, health reimbursement account,
43     health reimbursement arrangement, or medical expense reimbursement plan; and
44          (iv) a retirement benefit of any kind if the employer pays some or all of the cost of the
45     benefit; and
46          (b) does not include:
47          (i) a payment for social security;
48          (ii) workers' compensation insurance;
49          (iii) unemployment insurance;
50          (iv) a payment for Medicare;
51          (v) a payment or insurance required by federal or state law that is similar to a payment
52     or insurance listed in Subsection (1)(b)(i), (ii), (iii), or (iv);
53          (vi) any other benefit that state or federal law requires an employer to provide an
54     employee who would not otherwise be eligible to receive the benefit; or
55          (vii) any benefit that an employer provides an employee in order to avoid a penalty or
56     tax under the Patient Protection and Affordable Care Act, Pub. L. No. 111-148 and the Health
57     Care Education Reconciliation Act of 2010, Pub. L. No. 111-152, and related federal
58     regulations, including a penalty imposed by Internal Revenue Code, Section 4980H.

59          (2) (a) "Compensation" means, except as provided in Subsection (2)(c), the total
60     amount of payments made by a participating employer to a member of this system for services
61     rendered to the participating employer, including:
62          (i) bonuses;
63          (ii) cost-of-living adjustments;
64          (iii) other payments currently includable in gross income and that are subject to social
65     security deductions, including any payments in excess of the maximum amount subject to
66     deduction under social security law;
67          (iv) amounts that the member authorizes to be deducted or reduced for salary deferral
68     or other benefits authorized by federal law; and
69          (v) member contributions.
70          (b) "Compensation" for purposes of this chapter may not exceed the amount allowed
71     under Internal Revenue Code, Section 401(a)(17).
72          (c) "Compensation" does not include:
73          (i) the monetary value of remuneration paid in kind, including a residence or use of
74     equipment;
75          (ii) the cost of any employment benefits paid for by the participating employer;
76          (iii) compensation paid to a temporary employee, an exempt employee, or an employee
77     otherwise ineligible for service credit;
78          (iv) any payments upon termination, including accumulated vacation, sick leave
79     payments, severance payments, compensatory time payments, or any other special payments;
80          (v) any allowances or payments to a member for costs or expenses paid by the
81     participating employer, including automobile costs, uniform costs, travel costs, tuition costs,
82     housing costs, insurance costs, equipment costs, and dependent care costs; or
83          (vi) a teacher salary bonus described in Section 53F-2-513.
84          (d) The executive director may determine if a payment not listed under this Subsection
85     (2) falls within the definition of compensation.
86          (3) "Final average salary" means the amount calculated by averaging the highest five
87     years of annual compensation preceding retirement subject to Subsections (3)(a), (b), (c), (d),
88     and (e).
89          (a) Except as provided in Subsection (3)(b), the percentage increase in annual

90     compensation in any one of the years used may not exceed the previous year's compensation by
91     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
92     of the dollar during the previous year, as measured by a United States Bureau of Labor
93     Statistics Consumer Price Index average as determined by the board.
94          (b) In cases where the participating employer provides acceptable documentation to the
95     office, the limitation in Subsection (3)(a) may be exceeded if:
96          (i) the member has transferred from another agency; [or]
97          (ii) the member has been promoted to a new position[.]; or
98          (iii) for a member that is employed by a local education agency as defined in Section
99     53E-1-102:
100          (A) the member has moved to a new position at the same local education agency due to
101     a program need that causes the member to become a Ĥ→ [
regular] ←Ĥ full-time employee when
101a     the
102     member was previously not a Ĥ→ [
regular] ←Ĥ full-time employee; or
103          (B) the percentage increase is due to a Ĥ→ [
union-negotiated increase] negotiated increase
103a     through designated representatives under Subsection 34-20-9(1)(a) ←Ĥ for a group of
104     members that includes the member.
105          (c) If the member retires more than six months from the date of termination of
106     employment, the member is considered to have been in service at the member's last rate of pay
107     from the date of the termination of employment to the effective date of retirement for purposes
108     of computing the member's final average salary only.
109          (d) If the member has less than five years of service credit in this system, final average
110     salary means the average annual compensation paid to the member during the full period of
111     service credit.
112          (e) The annual compensation used to calculate final average salary shall be based on:
113          (i) a calendar year for a member employed by a participating employer that is not an
114     educational institution; or
115          (ii) a contract year for a member employed by an educational institution.
116          (4) "Participating employer" means an employer which meets the participation
117     requirements of Sections 49-12-201 and 49-12-202.
118          (5) (a) "Regular full-time employee" means an employee whose term of employment
119     for a participating employer contemplates continued employment during a fiscal or calendar
120     year and whose employment normally requires an average of 20 hours or more per week,

121     except as modified by the board, and who receives benefits normally provided by the
122     participating employer.
123          (b) "Regular full-time employee" includes:
124          (i) a teacher whose term of employment for a participating employer contemplates
125     continued employment during a school year and who teaches half-time or more;
126          (ii) a classified school employee:
127          (A) who is hired before July 1, 2013; and
128          (B) whose employment normally requires an average of 20 hours per week or more for
129     a participating employer, regardless of benefits provided;
130          (iii) an officer, elective or appointive, who earns $500 or more per month, indexed as
131     of January 1, 1990, as provided in Section 49-12-407;
132          (iv) a faculty member or employee of an institution of higher education who is
133     considered full-time by that institution of higher education; and
134          (v) an individual who otherwise meets the definition of this Subsection (5) who
135     performs services for a participating employer through a professional employer organization or
136     similar arrangement.
137          (c) "Regular full-time employee" does not include a classified school employee:
138          (i) (A) who is hired on or after July 1, 2013; and
139          (B) who does not receive benefits normally provided by the participating employer
140     even if the employment normally requires an average of 20 hours per week or more for a
141     participating employer;
142          (ii) (A) who is hired before July 1, 2013;
143          (B) who did not qualify as a regular full-time employee before July 1, 2013;
144          (C) who does not receive benefits normally provided by the participating employer;
145     and
146          (D) whose employment hours are increased on or after July 1, 2013, to require an
147     average of 20 hours per week or more for a participating employer; or
148          (iii) who is a person working on a contract:
149          (A) for the purposes of vocational rehabilitation and the employment and training of
150     people with significant disabilities; and
151          (B) that has been set aside from procurement requirements by the state pursuant to

152     Section 63G-6a-805 or the federal government pursuant to 41 U.S.C. Sec. 8501 et seq.
153          (6) "System" means the Public Employees' Contributory Retirement System created
154     under this chapter.
155          (7) "Years of service credit" means:
156          (a) a period consisting of 12 full months as determined by the board;
157          (b) a period determined by the board, whether consecutive or not, during which a
158     regular full-time employee performed services for a participating employer, including any time
159     the regular full-time employee was absent on a paid leave of absence granted by a participating
160     employer or was absent in the service of the United States government on military duty as
161     provided by this chapter; or
162          (c) the regular school year consisting of not less than eight months of full-time service
163     for a regular full-time employee of an educational institution.
164          Section 2. Section 49-13-102 is amended to read:
165          49-13-102. Definitions.
166          As used in this chapter:
167          (1) "Benefits normally provided" has the same meaning as defined in Section
168     49-12-102.
169          (2) (a) Except as provided in Subsection (2)(c), "compensation" means the total
170     amount of payments made by a participating employer to a member of this system for services
171     rendered to the participating employer, including:
172          (i) bonuses;
173          (ii) cost-of-living adjustments;
174          (iii) other payments currently includable in gross income and that are subject to social
175     security deductions, including any payments in excess of the maximum amount subject to
176     deduction under social security law; and
177          (iv) amounts that the member authorizes to be deducted or reduced for salary deferral
178     or other benefits authorized by federal law.
179          (b) "Compensation" for purposes of this chapter may not exceed the amount allowed
180     under Internal Revenue Code, Section 401(a)(17).
181          (c) "Compensation" does not include:
182          (i) the monetary value of remuneration paid in kind, including a residence or use of

183     equipment;
184          (ii) the cost of any employment benefits paid for by the participating employer;
185          (iii) compensation paid to a temporary employee, an exempt employee, or an employee
186     otherwise ineligible for service credit;
187          (iv) any payments upon termination, including accumulated vacation, sick leave
188     payments, severance payments, compensatory time payments, or any other special payments;
189          (v) any allowances or payments to a member for costs or expenses paid by the
190     participating employer, including automobile costs, uniform costs, travel costs, tuition costs,
191     housing costs, insurance costs, equipment costs, and dependent care costs; or
192          (vi) a teacher salary bonus described in Section 53F-2-513.
193          (d) The executive director may determine if a payment not listed under this Subsection
194     (2) falls within the definition of compensation.
195          (3) "Final average salary" means the amount calculated by averaging the highest three
196     years of annual compensation preceding retirement subject to Subsections (3)(a), (b), (c), and
197     (d).
198          (a) Except as provided in Subsection (3)(b), the percentage increase in annual
199     compensation in any one of the years used may not exceed the previous year's compensation by
200     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
201     of the dollar during the previous year, as measured by a United States Bureau of Labor
202     Statistics Consumer Price Index average as determined by the board.
203          (b) In cases where the participating employer provides acceptable documentation to the
204     office, the limitation in Subsection (3)(a) may be exceeded if:
205          (i) the member has transferred from another agency; [or]
206          (ii) the member has been promoted to a new position[.]; or
207          (iii) for a member that is employed by a local education agency as defined in Section
208     53E-1-102:
209          (A) the member has moved to a new position at the same local education agency due to
210     a program need that causes the member to become a Ĥ→ [
regular] ←Ĥ full-time employee when
210a     the
211     member previously was not a Ĥ→ [
regular] ←Ĥ full-time employee; or
212          (B) the percentage increase is due to a Ĥ→ [
union-negotiated increase] negotiated increase
212a     through designated representatives under Subsection 34-20-9(1)(a) ←Ĥ for a group of
213     members that includes the member.

214          (c) If the member retires more than six months from the date of termination of
215     employment and for purposes of computing the member's final average salary only, the
216     member is considered to have been in service at the member's last rate of pay from the date of
217     the termination of employment to the effective date of retirement.
218          (d) The annual compensation used to calculate final average salary shall be based on:
219          (i) a calendar year for a member employed by a participating employer that is not an
220     educational institution; or
221          (ii) a contract year for a member employed by an educational institution.
222          (4) "Participating employer" means an employer which meets the participation
223     requirements of Sections 49-13-201 and 49-13-202.
224          (5) (a) "Regular full-time employee" means an employee whose term of employment
225     for a participating employer contemplates continued employment during a fiscal or calendar
226     year and whose employment normally requires an average of 20 hours or more per week,
227     except as modified by the board, and who receives benefits normally provided by the
228     participating employer.
229          (b) "Regular full-time employee" includes:
230          (i) a teacher whose term of employment for a participating employer contemplates
231     continued employment during a school year and who teaches half time or more;
232          (ii) a classified school employee:
233          (A) who is hired before July 1, 2013; and
234          (B) whose employment normally requires an average of 20 hours per week or more for
235     a participating employer, regardless of benefits provided;
236          (iii) an officer, elective or appointive, who earns $500 or more per month, indexed as
237     of January 1, 1990, as provided in Section 49-13-407;
238          (iv) a faculty member or employee of an institution of higher education who is
239     considered full time by that institution of higher education; and
240          (v) an individual who otherwise meets the definition of this Subsection (5) who
241     performs services for a participating employer through a professional employer organization or
242     similar arrangement.
243          (c) "Regular full-time employee" does not include a classified school employee:
244          (i) (A) who is hired on or after July 1, 2013; and

245          (B) who does not receive benefits normally provided by the participating employer
246     even if the employment normally requires an average of 20 hours per week or more for a
247     participating employer;
248          (ii) (A) who is hired before July 1, 2013;
249          (B) who did not qualify as a regular full-time employee before July 1, 2013;
250          (C) who does not receive benefits normally provided by the participating employer;
251     and
252          (D) whose employment hours are increased on or after July 1, 2013, to require an
253     average of 20 hours per week or more for a participating employer; or
254          (iii) who is a person working on a contract:
255          (A) for the purposes of vocational rehabilitation and the employment and training of
256     people with significant disabilities; and
257          (B) that has been set aside from procurement requirements by the state pursuant to
258     Section 63G-6a-805 or the federal government pursuant to 41 U.S.C. Sec. 8501 et seq.
259          (6) "System" means the Public Employees' Noncontributory Retirement System.
260          (7) "Years of service credit" means:
261          (a) a period consisting of 12 full months as determined by the board;
262          (b) a period determined by the board, whether consecutive or not, during which a
263     regular full-time employee performed services for a participating employer, including any time
264     the regular full-time employee was absent on a paid leave of absence granted by a participating
265     employer or was absent in the service of the United States government on military duty as
266     provided by this chapter; or
267          (c) the regular school year consisting of not less than eight months of full-time service
268     for a regular full-time employee of an educational institution.
269          Section 3. Section 49-22-102 is amended to read:
270          49-22-102. Definitions.
271          As used in this chapter:
272          (1) "Benefits normally provided" has the same meaning as defined in Section
273     49-12-102.
274          (2) (a) "Compensation" means, except as provided in Subsection (2)(c), the total
275     amount of payments made by a participating employer to a member of this system for services

276     rendered to the participating employer, including:
277          (i) bonuses;
278          (ii) cost-of-living adjustments;
279          (iii) other payments currently includable in gross income and that are subject to social
280     security deductions, including any payments in excess of the maximum amount subject to
281     deduction under social security law;
282          (iv) amounts that the member authorizes to be deducted or reduced for salary deferral
283     or other benefits authorized by federal law; and
284          (v) member contributions.
285          (b) "Compensation" for purposes of this chapter may not exceed the amount allowed
286     under Internal Revenue Code, Section 401(a)(17).
287          (c) "Compensation" does not include:
288          (i) the monetary value of remuneration paid in kind, including a residence or use of
289     equipment;
290          (ii) the cost of any employment benefits paid for by the participating employer;
291          (iii) compensation paid to a temporary employee or an employee otherwise ineligible
292     for service credit;
293          (iv) any payments upon termination, including accumulated vacation, sick leave
294     payments, severance payments, compensatory time payments, or any other special payments;
295          (v) any allowances or payments to a member for costs or expenses paid by the
296     participating employer, including automobile costs, uniform costs, travel costs, tuition costs,
297     housing costs, insurance costs, equipment costs, and dependent care costs; or
298          (vi) a teacher salary bonus described in Section 53F-2-513.
299          (d) The executive director may determine if a payment not listed under this Subsection
300     (2) falls within the definition of compensation.
301          (3) "Corresponding Tier I system" means the system or plan that would have covered
302     the member if the member had initially entered employment before July 1, 2011.
303          (4) "Final average salary" means the amount calculated by averaging the highest five
304     years of annual compensation preceding retirement subject to Subsections (4)(a), (b), (c), (d),
305     and (e).
306          (a) Except as provided in Subsection (4)(b), the percentage increase in annual

307     compensation in any one of the years used may not exceed the previous year's compensation by
308     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
309     of the dollar during the previous year, as measured by a United States Bureau of Labor
310     Statistics Consumer Price Index average as determined by the board.
311          (b) In cases where the participating employer provides acceptable documentation to the
312     office, the limitation in Subsection (4)(a) may be exceeded if:
313          (i) the member has transferred from another agency; [or]
314          (ii) the member has been promoted to a new position[.]; or
315          (iii) for a member that is employed by a local education agency as defined in Section
316     53E-1-102:
317          (A) the member has moved to a new position at the same local education agency due to
318     a program need that causes the member to become a Ĥ→ [
regular] ←Ĥ full-time employee when
318a     the
319     member previously was not a Ĥ→ [
regular] ←Ĥ full-time employee; or
320          (B) the percentage increase is due to a Ĥ→ [
union-negotiated increase] negotiated increase
320a     through designated representatives under Subsection 34-20-9(1)(a) ←Ĥ for a group of
321     members that includes the member.
322          (c) If the member retires more than six months from the date of termination of
323     employment, the member is considered to have been in service at the member's last rate of pay
324     from the date of the termination of employment to the effective date of retirement for purposes
325     of computing the member's final average salary only.
326          (d) If the member has less than five years of service credit in this system, final average
327     salary means the average annual compensation paid to the member during the full period of
328     service credit.
329          (e) The annual compensation used to calculate final average salary shall be based on:
330          (i) a calendar year for a member employed by a participating employer that is not an
331     educational institution; or
332          (ii) a contract year for a member employed by an educational institution.
333          (5) "Participating employer" means an employer which meets the participation
334     requirements of:
335          (a) Sections 49-12-201 and 49-12-202;
336          (b) Sections 49-13-201 and 49-13-202;
337          (c) Section 49-19-201; or

338          (d) Section 49-22-201 or 49-22-202.
339          (6) (a) "Regular full-time employee" means an employee whose term of employment
340     for a participating employer contemplates continued employment during a fiscal or calendar
341     year and whose employment normally requires an average of 20 hours or more per week,
342     except as modified by the board, and who receives benefits normally provided by the
343     participating employer.
344          (b) "Regular full-time employee" includes:
345          (i) a teacher whose term of employment for a participating employer contemplates
346     continued employment during a school year and who teaches half time or more;
347          (ii) a classified school employee:
348          (A) who is hired before July 1, 2013; and
349          (B) whose employment normally requires an average of 20 hours per week or more for
350     a participating employer, regardless of benefits provided;
351          (iii) an appointive officer whose appointed position is full time as certified by the
352     participating employer;
353          (iv) the governor, the lieutenant governor, the state auditor, the state treasurer, the
354     attorney general, and a state legislator;
355          (v) an elected official not included under Subsection (6)(b)(iv) whose elected position
356     is full time as certified by the participating employer;
357          (vi) a faculty member or employee of an institution of higher education who is
358     considered full time by that institution of higher education; and
359          (vii) an individual who otherwise meets the definition of this Subsection (6) who
360     performs services for a participating employer through a professional employer organization or
361     similar arrangement.
362          (c) "Regular full-time employee" does not include:
363          (i) a firefighter service employee as defined in Section 49-23-102;
364          (ii) a public safety service employee as defined in Section 49-23-102;
365          (iii) a classified school employee:
366          (A) who is hired on or after July 1, 2013; and
367          (B) who does not receive benefits normally provided by the participating employer
368     even if the employment normally requires an average of 20 hours per week or more for a

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