1998 Legislation
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HOUSE BILL NO. 627 – Retirement, optional, Education Bd

HOUSE BILL NO. 627

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Daily Data Tracking History



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

Bill Text


H0627


                                                                        
 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fourth Legislature                 Second Regular Session - 1998
                                                                        

                             IN 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
24              the employer's "normal cost" under the public employee  retire-
25             ment  system  as  defined in section 59-1322, Idaho Code  
26             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 five  per cent    percent    (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-hundredths  per cent      percent
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 to  the member
40        contribution under the public employee retirement system  as  required  in
41        section  59-1333,  Idaho Code   six 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
17              the employer's "normal cost" under the public employee  retire-
18             ment  system  as  defined in section 59-1322, Idaho Code  
19             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 to  the member
35        contribution under the public employee retirement system  as  required  in
36        section  59-1333,  Idaho Code   six 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 / Fiscal Impact


    





                          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