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H0100.......................................by COMMERCE AND HUMAN RESOURCES PUBLIC EMPLOYEE RETIREMENT SYSTEM - Amends existing law to provide that upon withdrawal from the Public Employee Retirement System, political subdivisions shall provide retirement plans for their employees within specified minimum parameters. 01/22 House intro - 1st rdg - to printing 01/26 Rpt prt - to Com/HuRes
H0100|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature First Regular Session - 1999IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 100 BY COMMERCE AND HUMAN RESOURCES COMMITTEE 1 AN ACT 2 RELATING TO THE PUBLIC EMPLOYEE RETIREMENT SYSTEM; AMENDING SECTION 59-1326, 3 IDAHO CODE, TO PROVIDE THAT UPON WITHDRAWAL FROM THE PUBLIC EMPLOYEE 4 RETIREMENT SYSTEM, POLITICAL SUBDIVISIONS SHALL PROVIDE RETIREMENT PLANS 5 FOR THEIR EMPLOYEES WITHIN SPECIFIED MINIMUM PARAMETERS. 6 Be It Enacted by the Legislature of the State of Idaho: 7 SECTION 1. That Section 59-1326, Idaho Code, be, and the same is hereby 8 amended to read as follows: 9 59-1326. PROCEDURE FOR COMPLETE OR PARTIAL WITHDRAWAL OF POLITICAL SUBDI- 10 VISIONS FROM THE SYSTEM -- CALCULATION OF WITHDRAWAL LIABILITY -- INDEMNIFICA- 11 TION. (1) A political subdivision, through its governing body, may by resolu- 12 tion adopted by two-thirds (2/3) of the members of the governing body, declare 13 its intent to withdraw completely from the system and to submit the question 14 of withdrawing from the system to the active members of the political subdivi- 15 sion. The political subdivision shall notify its employees and the retirement 16 board, in writing, of its action, and shall advise the active members of their 17 right to vote for or against withdrawal, as provided in subsection (2) of this 18 section. A political subdivision shall automatically be considered to have 19 requested a complete withdrawal from the system the date the political subdi- 20 vision permanently ceases to employ active members. A withdrawing political 21 subdivision shall be required to make withdrawal liability payments as pro- 22 vided in this section. 23 (2) All active members of the withdrawing political subdivision shall be 24 allowed to vote by secret ballot for or against allowing the political subdi- 25 vision to completely withdraw from the system. More than fifty percent (50%) 26 of the withdrawing political subdivision's active members must approve the 27 complete withdrawal at least thirty (30) days before the effective withdrawal 28 date. All active members of the withdrawing political subdivision who are on 29 the political subdivision's payroll thirty (30) days before the effective 30 withdrawal date shall be allowed to vote. If more than fifty percent (50%) of 31 the withdrawing political subdivision's active members fail to vote for com- 32 plete withdrawal, the political subdivision shall not be allowed to withdraw. 33 Fifteen (15) days before the effective withdrawal date the governing board of 34 the withdrawing political subdivision shall certify to the retirement board 35 the results of the voting by the active members. 36 (3) Partial withdrawal occurs for a political subdivision when its aver- 37 age membership declines from one fiscal year to the next by more than twenty- 38 five (25) members and twenty-five percent (25%) of the average membership in 39 the earlier year. The effective date of partial withdrawal is the first day 40 after the end of the later year. 41 "Average membership" for a fiscal year shall equal one-twelfth (1/12) of 42 the sum of the number of active members employed during each month of that 43 year. 2 1 (4) Complete withdrawal by a political subdivision shall be the first day 2 of the month following the date the political subdivision ceases to employ 3 active members or the first day of the month following sixty (60) days from 4 the date the board receives the political subdivision's written request to 5 withdraw. However, the complete withdrawal date shall not occur before the 6 withdrawal liability is determined, as provided in subsection (7) of this sec- 7 tion. 8 (5) After complete withdrawal, all employees of the withdrawing political 9 subdivision shall be ineligible to accrue future benefits with the system due 10 to employment with the withdrawing political subdivision. The withdrawing 11 political subdivision shall be ineligible to request to be included in the 12 system, as provided in section 59-1321, Idaho Code, for five (5) years after 13 its complete withdrawal date. 14 (6) All active or inactive members of the political subdivision shall be 15 eligible for benefits accrued with the system up to the complete withdrawal 16 date. However, no retirement allowance or separation benefit shall be paid 17 until the member actually separates from service with the withdrawing politi- 18 cal subdivision, and there is no guarantee of right to re-employment made by 19 the withdrawing political subdivision. If the person returns to employment 20 with the same withdrawing political subdivision within ninety (90) days, any 21 separation benefit or retirement allowance paid to the person shall be repaid 22 to the system. 23 (7) On the date of complete withdrawal, the withdrawal liability of an 24 employer is (a) multiplied by the ratio of (b) to (c) as follows: 25 (a) The excess of the actuarial present value of the vested accrued bene- 26 fits of the system's members over the fair value of its assets, both as of 27 the date of the last actuarial valuation adopted by the board prior to the 28 complete withdrawal date based on the assumption that thirty percent (30%) 29 of all terminating employees will eventually return to employment covered 30 by the system and that future cost-of-living allowances as provided in 31 section 59-1355, Idaho Code, will be at a rate of two percent (2%) per 32 year; 33 (b) The total present value of accrued benefits of all active members of 34 the withdrawing political subdivision as of the last actuarial valuation 35 adopted by the board prior to the complete withdrawal date; 36 (c) The total present value of accrued benefits of all active members of 37 the system as of the last actuarial valuation adopted by the board prior 38 to the complete withdrawal date. 39 The actuarial costs to determine the amount described in subsection (7)(b) 40 of this section shall be paid by the withdrawing political subdivision. 41 (8) On the date of partial withdrawal, the withdrawal liability of an 42 employer is the same as if complete withdrawal had occurred, multiplied by one 43 (1) minus the ratio of (a) to (b) as follows: 44 (a) The average membership of the employer estimated by the board for the 45 year commencing on such date; 46 (b) The average membership of the employer during the second complete 47 fiscal year prior to such date. 48 (9) The withdrawing political subdivision shall enter into a contract 49 with the system which establishes terms for the political subdivision's pay- 50 ment of its withdrawal liability. The contract shall use an interest rate 51 equal to the interest rate used in the actuarial valuation adopted by the 52 board prior to the withdrawal date, net of actuarially assumed investment 53 expenses. The contract shall not extend the duration of the withdrawal liabil- 54 ity payments beyond ten (10) years or the end of the current amortization 55 period whichever is less. The contract shall be a financial obligation of the 3 1 withdrawing political subdivision and any of its successors and assigns. 2 "Current amortization period" means the period over which the amortization 3 payment rate times the actuarial present value of the projected salaries is 4 equivalent to the unfunded actuarial liability, all determined by the current 5 valuation last adopted by the board prior to the complete withdrawal date. 6 (10) Upon the complete withdrawal of the political subdivision, the system 7 shall have no further legal obligation to the political subdivision or its 8 employees, nor shall the system be held accountable for the continued future 9 accrual of any retirement benefit rights to which such employees may be enti- 10 tled beyond the complete withdrawal date. Any litigation regarding the forfei- 11 ture of any benefits because of the political subdivision's complete with- 12 drawal from the system shall be the sole legal responsibility of the withdraw- 13 ing political subdivision and the withdrawing political subdivision shall 14 indemnify and hold harmless the system, its board, its employees and the state 15 of Idaho, from any claims, losses, costs, damages, expenses, and liabilities, 16 including without limitation, court costs and reasonable attorney's fees, 17 asserted by any person or entity as a result of the political subdivision's 18 withdrawal from the system. 19 (11) Upon withdrawal from the system, the political subdivision 20 shall provide that all employees of the political subdivision have access to a 21 retirement plan. If the retirement plan is an after tax retirement plan, the 22 political subdivision shall provide not less than a six percent (6%) match of 23 the employee's contributions. If the political subdivision elects for a 24 414(h) attachment plan, the employer shall provide a match of not less than 25 the employee's contributions.
STATEMENT OF PURPOSE
RS08525
Relating to the Public Employee Retirement System; to provide that
upon withdrawal from the public employee retirement system,
political subdivisions shall provide retirement plans for their
employees within specified minimum parameters.
FISCAL NOTE
No fiscal impact.
CONTACT: Speaker Bruce Newcomb
332-1111
STATEMENT OF PURPOSE/ FISCAL NOTE Bill No. H 10