school districts; annual financial reports
w/d
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Committee on Education |
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s/e dpa |
Committee
on Government Reform |
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dpa |
Caucus
and COW |
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x |
As
Passed the House |
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SB
1328 establishes a deferred retirement option plan (DROP) for Public Safety
Personnel Retirement System (PSPRS) and Correctional Officers Retirement Plan
(CORP) members. This bill also
establishes the guidelines for the plan. SB 1328 also makes numerous changes to
a Corrections Officers Retirement Plan (CORP) member’s and surviving spouse’s
pension including twenty-year normal retirement and retirement cap
changes. Additionally, the bill
decreases the member contribution rate from 8.5 per cent to 7.65 per cent.
DROP’s
are designed to give members an additional option at normal retirement. A member is required to designate a period,
a beneficiary, agree to cease to accrue benefits during the period and
terminate employment at the end of the period.
The benefits credited to the DROP account are paid-out upon termination
as a lump sum.
Currently,
in order to qualify for normal retirement, a CORP member must have 25 years of
service, or reach age 62 with 10 years of service or have any combination of
age and credited service equaling 80. A
CORP member’s normal retirement pension is calculated by multiplying 2.5 per
cent of the average compensation by the number of years of service up to 30
years, not to exceed 75% of the member’s average compensation. CORP is funded
in part by an employer-employee matching program which is currently set at 8.5%
of the employee’s monthly average compensation.
·
Requires the board or fund
manager to offer DROP to eligible PSPRS or CORP members on a voluntary basis as
an alternative method of benefit accrual under the system from July 1, 2001 to
June 30, 2006.
·
Establishes DROP to provide members who elect to
participate access to a lump sum benefit upon termination, in addition to their
normal monthly retirement benefit.
·
States that any member of PSPRS
or CORP who is eligible for a normal pension is eligible to participate in
DROP.
·
Requires that a member who
elects to participate in DROP must voluntarily and irrevocably:
1)
Designate a period of
participation that is not more than sixty consecutive months.
2)
Cease to accrue membership
benefits beginning on the first day of the member's participation in DROP.
3)
Have DROP plan benefits credited
to a DROP participation account.
4)
Receive benefits from the system
on termination of employment at the same time and in the same manner as a
normal retirement pension.
5)
Agree to terminate employment on
completion of the DROP participation period.
If a member fails to terminate employment on completion of the
designated DROP participation period, the member is not entitled to the
interest accumulation on the DROP participation account. However, a member may terminate
participation in DROP by voluntarily terminating employment at any time before
completing the DROP participation period.
·
States that participation in
DROP terminates upon one of the following:
1)
Completion of the DROP
participation period.
2) Termination of employment. If
termination of employment is reversed, a member's participation in DROP, minus
any benefits previously distributed, shall be reinstated for the duration of
the original DROP participation period.
3)
Death of a member.
4)
Approval of disability retirement benefits.
·
Establishes a DROP participation account within the system
on behalf of each DROP participant.
·
Requires that all accrued benefits be accounted for in the
DROP participation account.
·
States that a member does not have a claim on the member’s
DROP assets during the DROP period, and that assets cannot be held separately
from the fund assets for a DROP participant.
·
States that all amounts credited
to a member's DROP participation account are fully vested.
·
Requires a member's DROP
participation account to be credited with the following:
1) An amount that is
computed in the same manner as a normal retirement. This amount shall be increased annually if applicable.
2)
Interest in an amount equal to
the assumed rate of return of the fund.
·
Prohibits members from receiving
retirement benefits, including COLA increases and health insurance premium
subsidies, during the DROP participation period. If the member becomes disabled during DROP participation, the
member is eligible for disability benefits.
·
States that beginning on the
date the member elects to participate in DROP, employee and employer
contributions for that member stop.
·
Allows a DROP member who becomes
disabled during the period of DROP participation to apply for disability
retirement benefits.
·
Requires a member who elects to
participate in the DROP to designate a beneficiary.
·
States that if a member dies
during the member's DROP participation, the designated beneficiary of the
member is entitled to receive all amounts in the member's DROP participation
account.
·
States that if a beneficiary
predeceases a DROP participant who dies before designating a new beneficiary,
all distributions are made to the estate of the DROP participant.
·
Prohibits a member from making a
beneficiary designation that results in a repeal of a member's community
property obligations.
·
States that upon termination of
DROP participation and employment, a member is entitled to receive both of the
following:
1) The monthly retirement allowance.
2) All amounts credited to the member's DROP participation account on the
effective date of termination.
·
Allows the member to choose to
transfer a lump sum distribution to an IRA or other eligible retirement plan.
·
Allows the board or fund manager
to adopt rules for the DROP to comply with federal law.
·
Provides
a repeal date of DROP June 30, 2006.
·
Allows
a member who is participating in DROP before July 1, 2006 to continue to
participate until the member's effective date of termination, even after the
repeal of DROP.
The
strike-everything amendment to SB 1328 passed the Government Reform committee
with no further changes.
SB
1328 was amended in the Committee of the Whole as follows: