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H0627..........................................................by EDUCATION
RETIREMENT - EDUCATION BOARD - Amends existing law to establish fixed rates
for contributions to the optional retirement program established by the
State Board of Education for employees of institutions of higher education,
community colleges and postsecondary vocational education institutions.
02/05 House intro - 1st rdg - to printing
02/06 Rpt prt - to HuRes
02/18 Rpt out - rec d/p - to 2nd rdg
02/19 2nd rdg - to 3rd rdg
02/23 3rd rdg - PASSED - 70-0-0
AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Bivens,
Black(15), Black(23), Boe, Bruneel, Callister, Campbell, Chase,
Clark, Crane, Crow, Cuddy, Deal, Denney, Ellsworth, Field(13),
Field(20), Gagner, Geddes, Gould, Hadley, Hansen, Henbest, Hornbeck,
Jaquet, Jones(9), Jones(22), Jones(20), Judd, Kellogg, Kempton,
Kendell, Kjellander, Kunz, Lake, Linford, Loertscher, Mader, Marley,
McKague, Meyer, Miller, Mortensen, Newcomb, Pischner, Pomeroy,
Reynolds, Richman, Ridinger, Robison, Sali, Schaefer, Stevenson,
Stoicheff, Stone, Stubbs, Taylor, Tilman, Tippets, Trail, Watson,
Wheeler, Wood, Zimmermann, Mr Speaker
NAYS -- None
Absent and excused -- None
Floor Sponsors - Miller, Bieter
Title apvd - to Senate
02/24 Senate intro - 1st rdg - to Com/HuRes
03/11 Rpt out - rec d/p - to 2nd rdg
03/12 2nd rdg - to 3rd rdg
03/18 3rd rdg - PASSED - 34-0-1
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Deide, Dunklin, Frasure, Geddes,
Hawkins, Ingram, Ipsen, Keough, King, Lee, McLaughlin, Noh, Parry,
Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stennett,
Sweeney, Thorne, Twiggs, Wheeler, Whitworth
NAYS--None
Absent and excused--Hansen
Floor Sponsor - Crow
Title apvd - to House
03/19 To enrol - rpt enrol - Sp signed
Pres signed - to Governor
03/24 Governor signed
Session Law Chapter 297
Effective: 07/01/98
H0627|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 627 BY EDUCATION COMMITTEE 1 AN ACT 2 RELATING TO OPTIONAL RETIREMENT PROGRAMS ESTABLISHED BY THE STATE BOARD OF 3 EDUCATION; AMENDING SECTION 33-107A, IDAHO CODE, TO FIX THE EMPLOYER AND 4 EMPLOYEE CONTRIBUTION RATE AND TO MAKE TECHNICAL CORRECTIONS; AND AMENDING 5 SECTION 33-107B, IDAHO CODE, TO FIX THE EMPLOYER AND EMPLOYEE CONTRIBUTION 6 RATE. 7 Be It Enacted by the Legislature of the State of Idaho: 8 SECTION 1. That Section 33-107A, Idaho Code, be, and the same is hereby 9 amended to read as follows: 10 33-107A. BOARD MAY ESTABLISH AN OPTIONAL RETIREMENT PROGRAM. (1) The 11 state board of education may establish an optional retirement program under 12 which contracts providing retirement and death benefits may be purchased for 13 members of the teaching staff and officers of the university of Idaho, Idaho 14 state university, Boise state university, Lewis Clark state college and the 15 state board of education who are hired on or after July 1, 1993; provided, 16 however, that no such employee shall be eligible to participate in an optional 17 retirement program unless he would otherwise be eligible for membership in the 18 public employee retirement system of Idaho. The benefits to be provided for or 19 on behalf of participants in an optional retirement program shall be provided 20 through annuity contracts or certificates, fixed or variable in nature, or a 21 combination thereof, whose benefits are owned by the participants in the pro- 22 gram. 23 (2) The state board of education is hereby authorized to provide for the 24 administration of the optional retirement program and to perform or authorize 25 the performance of such functions as may be necessary for such purposes. The 26 board shall designate the company or companies from which contracts are to be 27 purchased under the optional retirement program and shall approve the form and 28 contents of such contracts. In making the designation and giving approval, 29 the board shall consider: 30 (a) The nature and extent of the rights and benefits to be provided by 31 such contracts for participants and their beneficiaries; 32 (b) The relation of such rights and benefits to the amount of contribu- 33 tions to be made; 34 (c) The suitability of such rights and benefits to the needs of the par- 35 ticipants and the interests of the institutions in the recruitment and 36 retention of staff members; and 37 (d) The ability of the designated company to provide such suitable rights 38 and benefits under such contracts. 39 (3) Elections to participate in an optional retirement program shall be 40 as follows: 41 (a) Eligible employees are: 42 (i) Those faculty and nonclassified staff initially appointed or 43 hired between July 1, 1990 and June 30, 1993; and 2 1 (ii) Those teaching staff and officers initially appointed or hired 2 on or after July 1, 1993. 3 All eligible employees, except those who are vested members of the public 4 employee retirement system of Idaho, shall participate in the optional 5 retirement program. 6 (b) Vested members of the public employee retirement system of Idaho may 7 make a one (1) time irrevocable election to remain a member of that 8 retirement system. The election shall be made in writing, within sixty 9 (60) days of the date of initial hire or appointment or the effective date 10 of this act, whichever occurs later. It shall be filed with the adminis- 11 trative officer of the employing institution. 12 (c) An election by an eligible employee of the optional retirement pro- 13 gram shall be irrevocable and shall be accompanied by an appropriate 14 application, where required, for issuance of a contract or contracts under 15 the program. 16 (d) The accumulated contributions of employees who make the one (1) time 17 irrevocable election or are required to participate in the optional 18 retirement program may be transferred by the public employee retirement 19 system of Idaho to such qualified plan, maintained under the optional 20 retirement program, as designated in writing by the employee. 21 (4) (a) Each institution shall contribute on behalf of each participant 22 in its optional retirement program the following: 23 (i) To the designated company or companies, an amount equal to 24the employer's "normal cost" under the public employee retire-25ment system as defined in section 59-1322, Idaho Code26 seven and eighty-one hundredths percent (7.81%) of each participant's 27 salary , reduced by any amount necessary, if any, to provide 28 contributions to a total disability program provided either by the 29 state or by a private insurance carrier licensed and authorized to 30 provide such benefits or any combination thereof, but in no event 31 less than fiveper centpercent (5%) of 32 each participant's salary; and 33 (ii) To the public employee retirement system, an amount equal to 34 three and three one-hundredthsper centpercent 35 (3.03%) of salaries of members who are participants in the 36 optional retirement program. This amount shall be paid until July 1, 37 2015, and is in lieu of amortization payments and withdrawal contri- 38 butions required pursuant to chapter 13, title 59, Idaho Code. 39 (b) Each participant shall contribute an amount equal tothe member40contribution under the public employee retirement system as required in41section 59-1333, Idaho Codesix and ninety-seven hundredths 42 percent (6.97%) of the participant's salary . Employee contributions 43 may be made by employer pick-up pursuant to section 59-1332, Idaho Code. 44 (c) Payment of contributions authorized or required under this subsection 45 shall be made by the financial officer of the employing institution to the 46 designated company or companies for the benefits of each participant. 47 (5) Any person participating in the optional retirement program shall be 48 ineligible for membership in the public employee retirement system of Idaho so 49 long as he remains continuously employed in any teaching staff position or as 50 an officer with any of the institutions under the jurisdiction of the state 51 board of education. 52 (6) A retirement, death or other benefit shall not be paid by the state 53 of Idaho or the state board of education for services credited under the 54 optional retirement program. Such benefits are payable to participants or 55 their beneficiaries only by the designated company or companies in accordance 3 1 with the terms of the contracts. 2 SECTION 2. That Section 33-107B, Idaho Code, be, and the same is hereby 3 amended to read as follows: 4 33-107B. BOARD MAY ESTABLISH AN OPTIONAL RETIREMENT PROGRAM FOR COMMUNITY 5 COLLEGES AND POSTSECONDARY VOCATIONAL EDUCATION INSTITUTIONS. (1) The state 6 board of education may establish an optional retirement program under which 7 contracts providing retirement and death benefits may be purchased for members 8 of the teaching staff and officers of community colleges and postsecondary 9 vocational education institutions, including north Idaho college, college of 10 southern Idaho and eastern Idaho technical college, hired on or after July 1, 11 1997; provided however, that no such employee shall be eligible to participate 12 in an optional retirement program unless he would otherwise be eligible for 13 membership in the public employee retirement system of Idaho. The benefits to 14 be provided for or on behalf of participants in an optional retirement program 15 shall be provided through annuity contracts or certificates, fixed or variable 16 in nature, or a combination thereof, whose benefits are owned by the partici- 17 pants in the program. 18 (2) The state board of education is hereby authorized to provide for the 19 administration of the optional retirement program and to perform or authorize 20 the performance of such functions as may be necessary for such purposes. The 21 board shall designate the company or companies from which contracts are to be 22 purchased under the optional retirement program and shall approve the form and 23 contents of such contracts. In making the designation and giving approval, 24 the board shall consider: 25 (a) The nature and extent of the rights and benefits to be provided by 26 such contracts for participants and their beneficiaries; 27 (b) The relation of such rights and benefits to the amount of contribu- 28 tions to be made; 29 (c) The suitability of such rights and benefits to the needs of the par- 30 ticipants and the interests of the institutions in the recruitment and 31 retention of staff members; and 32 (d) The ability of the designated company to provide such suitable rights 33 and benefits under such contracts. 34 (3) Elections to participate in an optional retirement program shall be 35 as follows: 36 (a) Eligible employees are the teaching staff and officers initially 37 appointed or hired on or after the effective date of this chapter. All 38 eligible employees, except those who are vested members of the public 39 employee retirement system of Idaho, shall participate in the optional 40 retirement program. 41 (b) Eligible employees who are vested members of the public employee 42 retirement system of Idaho may make a one (1) time irrevocable election to 43 transfer to the optional retirement program. The election shall be made in 44 writing and within sixty (60) days of the date of initial hire or appoint- 45 ment, or one hundred fifty (150) days after the effective date of this 46 chapter, whichever occurs later. The election shall be filed with the 47 administrative officer of the employing institution. The election shall 48 be effective not later than the first day of the second pay period follow- 49 ing the date of the election. 50 (c) Teaching staff and officers employed by the institution the day 51 before the effective date of this chapter may make a one (1) time irrevo- 52 cable election to participate in the optional retirement program. The 53 election shall be made in writing and within one hundred fifty (150) days 4 1 after the effective date of this chapter. The election shall be filed with 2 the administrative officer of the employing institution. The election 3 shall be effective not later than the first day of the second pay period 4 following the date of the election. 5 (d) The accumulated contributions of employees who make the one (1) time 6 irrevocable election or are required to participate in the optional 7 retirement program may be transferred by the public employee retirement 8 system of Idaho to such qualified plan, maintained under the optional 9 retirement program, as designated in writing by the employee. 10 (e) An election by an eligible employee of the optional retirement pro- 11 gram shall be irrevocable and shall be accompanied by an appropriate 12 application, where required, for issuance of a contract or contracts under 13 the program. 14 (4) (a) Each institution shall contribute on behalf of each participant 15 in its optional retirement program the following: 16 (i) To the designated company or companies, an amount equal to 17the employer's "normal cost" under the public employee retire-18ment system as defined in section 59-1322, Idaho Code19 seven and eighty-one hundredths percent (7.81%) of each participant's 20 salary , reduced by any amount necessary, if any, to provide 21 contributions to a total disability program provided either by the 22 state or by a private insurance carrier licensed and authorized to 23 provide such benefits, or any combination thereof, but in no event 24 less than five percent (5%) of each participant's salary; and 25 (ii) To the public employee retirement system, an amount equal to 26 three and eighty-three hundredths percent (3.83%) of salaries of mem- 27 bers who are participants in the optional retirement program. This 28 amount shall be paid until July 1, 2011 and is in lieu of amortiza- 29 tion payments and withdrawal contributions required pursuant to chap- 30 ter 13, title 59, Idaho Code. 31 (b) For the purposes of section 59-1322, Idaho Code, the term "projected 32 salaries" shall include the sum of the annual salaries of all participants 33 in the optional retirement program established pursuant to this section. 34 (c) Each participant shall contribute an amount equal tothe member35contribution under the public employee retirement system as required in36section 59-1333, Idaho Codesix and ninety-seven hundredths 37 percent (6.97%) . Employee contributions may be made by employer 38 pick-up pursuant to section 59-1332, Idaho Code. 39 (5) Any person participating in the optional retirement program shall be 40 ineligible for membership in the public employee retirement system of Idaho so 41 long as he remains continuously employed in any teaching staff position or as 42 an officer with any of the institutions under the jurisdiction of the state 43 board of education. 44 (6) A retirement, death or other benefit shall not be paid by the state 45 of Idaho or the state board of education for services credited under the 46 optional retirement program. Such benefits are payable to participants or 47 their beneficiaries only by the designated company or companies in accordance 48 with the terms of the contracts.
STATEMENT OF PURPOSE
RS 07819
This legislation creates fixed employer and employee contribution
rates for optional retirement plans at the state's institutions of
higher education at the rate currently established by PERSI.
The Public Employee Retirement System (PEPSI) is a "defined
benefit plan" in which the employer and employee contributions
may fluctuate depending upon cost variation or a decrease in
unfunded actuarial liability to produce a "defined benefit."
Decreases in unfunded liability requirements or variations in
normal cost may change the contribution rates. However, the
"defined benefit" does not change.
The optional retirement plan (ORP)is a "defined contribution" plan
in which the investment is substantially directed by the employee.
The ORP does not provide the "defined benefit" as is envisioned by
PERSI, but contemplates certain returns on investment. For the
employee, stability of contribution rates will accomplish
realistic investment goals. Fixing the employer contribution rates
provides predictability for budget purposes.
FISCAL NOTE
There is no present or anticipated fiscal impact upon state or
community institutions. On a comparative basis with PERSI, if
PERSI normal cost or amortization rates were reduced or
increased, the institutional costs for the optional retirement
plan would remain stable and would not fluctuate from the
legislatively established rate in this legislation.
CONTACT: Jane Buser
Boise State University
208-385-1739
STATEMENT OF PURPOSE/FISCAL NOTE
Bill No. H627