1999 Legislation
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HOUSE BILL NO. 172 – PERSI, credited service/age, adjust


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H0172.......................................by COMMERCE AND HUMAN RESOURCES
PUBLIC EMPLOYEE RETIREMENT SYSTEM - Amends existing law relating to the
Public Employee Retirement System to provide an adjustment in the sum of
the credited service and age which is applied to the member's service ratio
to calculate benefits.

02/04    House intro - 1st rdg - to printing
02/05    Rpt prt - to Com/HuRes

Bill Text


 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fifth Legislature                 First Regular Session - 1999

                             IN THE HOUSE OF REPRESENTATIVES

                                    HOUSE BILL NO. 172


 1                                        AN ACT
 5        FITS.

 6    Be It Enacted by the Legislature of the State of Idaho:

 7        SECTION  1.  That  Section 59-1346, Idaho Code, be, and the same is hereby
 8    amended to read as follows:

 9        59-1346.  COMPUTATION OF  EARLY  RETIREMENT  ALLOWANCES.  (1)  The  annual
10    amount of initial early retirement allowance of a member shall be a percentage
11    of  the  member's  accrued  retirement allowance. Such percentage shall be one
12    hundred percent (100%) if the sum of the number of years and months  of  cred-
13    ited  service  and the age in years and months is equal to or greater than the
14    sum indicated below. Otherwise, such percentage shall be one  hundred  percent
15    (100%)  reduced by one-fourth of one percent (.25%) for each month up to sixty
16    (60) months that the member's retirement precedes the date the member would be
17    eligible to receive full accrued benefit without additional credited  service,
18    and  further reduced by two-thirds of one percent (.6667%) for each additional
19    month.  Effective October 1, 1992, the further reduction for  each  additional
20    month  shall  equal  six thousand and forty-two ten-thousandths of one percent
21    (.6042%) of the member's average monthly salary; effective  October  1,  1993,
22    the further reduction for each additional month shall equal five thousand four
23    hundred  and seventeen ten-thousandths of one percent (.5417%) of the member's
24    average monthly salary; and effective October 1, 1994, the  further  reduction
25    for  each  additional  month shall equal four thousand seven hundred and nine-
26    ty-two ten-thousandths of one percent (.4792%) of the member's average monthly
27    salary. Entitlement to an annual amount of accrued retirement allowance  shall
28    not  vest until the effective date of that annual amount of accrued retirement
29    allowance.  The retirement benefits shall be calculated on the amounts,  terms
30    and conditions in effect at the date of the final contribution by the member.
31     If a member's service retire-      Then the sum of the member's     Effective 
32    ment ratio as defined by section  credited service and age must be   September 30, 
33        59-1341, Idaho Code, is:         equal to or greater than:       1999 :
34             0.000 to 0.050                          90                  85 
35             0.051 to 0.150                          89                  84 
36             0.151 to 0.250                          88                  83 
37             0.251 to 0.350                          87                  82 
38             0.351 to 0.450                          86                  81 
39             0.451 to 0.550                          85                  80 
40             0.551 to 0.650                          84                  79 
41             0.651 to 0.750                          83                  78 
42             0.751 to 0.850                          82                  77 
43             0.851 to 0.950                          81                  76 


 1             0.951 to 1.000                   80 .            75. 
 2        (2)  If the majority of a member's credited service is as an elected offi-
 3    cial or as an appointed official, except as a member of the Idaho legislature,
 4    and  that  official was normally in the administrative offices of the employer
 5    less than twenty (20) hours per week during the term of office,  or  was  nor-
 6    mally  not  required  to  be  present  at  any particular work station for the
 7    employer twenty (20) hours per week or more during the term  of  office,  that
 8    member's  accrued  retirement  allowance for service credited only during that
 9    period shall be computed from an average monthly salary  for  salary  received
10    during  that  period  of  such employment only. The initial service retirement
11    allowance of members of the Idaho legislature will be computed under the  pro-
12    visions  of  this section, on the basis of their total months of credited ser-
13    vice.
14        (3)  If that member has credited service from any  other  employment,  the
15    accrued  retirement allowance for the credited service from such other employ-
16    ment shall be computed from an average monthly salary for salary received dur-
17    ing the period of such other employment.

Statement of Purpose / Fiscal Impact

                      STATEMENT OF PURPOSE
                            RS 08802

 This legislation will change the current calculation used by the Public Employee
Retirement System of Idaho (PERSI) to determine when a participant is eligible for
unreduced retirement benefits. Specifically, it amends Section 59-1346 by adjusting the
credited service and age requirements, providing the "Rule of 85" for general employees
and the "Rule of 75" for police members and firefighters.

                          FISCAL NOTE 

This bill would increase the normal cost of the PERSI system by .45% of pay, which
increases the total temporary contribution rate from 15.78% to 16.23%. Of this increase,
.28% will be the responsibility of the employers, .17% the responsibility of general
employees, and .20% the responsibility of police members and firefighters. As of July 1,
1998, PERSI's actuaries reported that the system's unfunded liability has been completely
eliminated; and, in fact, the funding ratio stood at 108.6%. The actuaries also estimated
that, had the changes proposed in this legislation been in effect, that ratio would have been
reduced to 105.6. (a reduction of 8144.8 million, leaving $269.9 million more in assets
than liabilities). The proposed improvements can be implemented without increasing the
total employer and employee contribution rate above the current permanent rates of
17.78% that has been established by the PERSI Board and which should have been
budgeted for by employer units. The total contribution rate is assumed to go to the permanent rate
on November 1, 1999, if the Board takes no action to extend the temporary period.

                        Representative Tom Trail     (Eor all contacts:
                        Representative Tim Ridinger  208-332-2100)
                        Senator John Andreason

                        OTHER CO-SPONSOR';
                        Representative Max Black      Senator Cecil Ingram
                        Representative Wendy Jaquet   Senator Shawn Keough

RS08802                                                   Page 2

                        Representative Doug Jones     Senator Marguerite McLaughlin
                        Representative Bert Marley    Senator Gary Schroeder
                        Representative Shirley Ringo  Senator Sheila Sorensen
                        Representative Ruby Stone     Senator Betsy Dunklin

                                    STATEMENT OE PURPOSE/ FISCAL NOTE        Bill No.  H 172