2002 Legislation
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SENATE BILL NO. 1303 – PERSI, code reference corrected


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S1303.......................................by COMMERCE AND HUMAN RESOURCES
PUBLIC EMPLOYEE RETIREMENT SYSTEM - Amends existing law to provide a
correct code reference to Section 401 of the Internal Revenue Code, which
is in the definition of "salary" for Public Employee Retirement System
01/18    Senate intro - 1st rdg - to printing
01/21    Rpt prt - to Com/HuRes
01/25    Rpt out - rec d/p - to 2nd rdg
01/28    2nd rdg - to 3rd rdg
01/29    3rd rdg - PASSED - 32-0-3
      AYES -- Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
      Darrington, Davis, Deide, Dunklin, Frasure, Geddes, Goedde, Hawkins,
      Hill, Ingram, Keough, King-Barrutia, Little, Lodge, Marley, Noh,
      Richardson, Risch, Sandy, Schroeder, Sorensen, Stegner, Stennett,
      Thorne(Thorne), Wheeler, Williams
      NAYS -- None
      Absent and excused -- Brandt, Ipsen, Sims
    Floor Sponsor - Goedde
    Title apvd - to House
01/30    House intro - 1st rdg - to Com/HuRes
02/12    Rpt out - rec d/p - to 2nd rdg
02/13    2nd rdg - to 3rd rdg
02/15    3rd rdg - PASSED - 60-0-10
      AYES -- Aikele, Barraclough, Barrett, Bell, Bieter, Black, Block,
      Boe, Bolz, Bradford, Callister, Campbell, Clark, Collins, Cuddy,
      Deal, Denney, Ellis, Ellsworth, Eskridge, Field(13), Field(20),
      Gagner, Hadley, Hammond, Harwood, Henbest, Higgins, Hornbeck, Jaquet,
      Jones, Kellogg, Kunz, Langford, Loertscher, Mader, Martinez, McKague,
      Meyer, Montgomery, Mortensen, Moyle, Pearce, Pischner, Pomeroy,
      Raybould, Ridinger, Roberts, Robison, Sali, Schaefer, Shepherd,
      Smith(33), Smylie, Stevenson, Stone, Tilman, Trail, Wheeler, Young
      NAYS -- None
      Absent and excused -- Bedke, Bruneel, Crow, Gould, Kendell, Lake,
      Sellman, Smith(23), Wood, Mr. Speaker
    Floor Sponsor - Bolz
    Title apvd - to Senate
02/18    To enrol
02/19    Rpt enrol - Pres signed
02/20    Sp signed
02/21    To Governor
02/26    Governor signed
         Session Law Chapter 46
         Effective: 02/26/02

Bill Text

  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  Second Regular Session - 2002
                                       IN THE SENATE
                                    SENATE BILL NO. 1303
  1                                        AN ACT
  5    Be It Enacted by the Legislature of the State of Idaho:
  6        SECTION 1.  That Section 59-1302, Idaho Code, be, and the same  is  hereby
  7    amended to read as follows:
  8        59-1302.  DEFINITIONS.  (1)  As  used  in  this chapter, each of the terms
  9    defined in this section shall have the meaning given in this section unless  a
 10    different meaning is clearly required by the context.
 11        (2)  "Active  member" means any employee who is not establishing the right
 12    to receive benefits through his or her employer's participation in  any  other
 13    retirement  system  established for Idaho public employees, if such participa-
 14    tion is mandated by applicable Idaho statutes other than this chapter.  In  no
 15    case will an employee be entitled to any benefit under this chapter for public
 16    service  if  such  employee is establishing retirement benefit entitlements by
 17    other Idaho statutes or federal statutes other than military service or social
 18    security for that same service.
 19        (3)  "Accumulated contributions" means the sum of amounts contributed by a
 20    member of the system, together with regular interest credit thereon.
 21        (4)  "Actuarial equivalent" means a benefit equal in value to another ben-
 22    efit, when computed upon the basis of the actuarial tables in use by the  sys-
 23    tem.
 24        (5)  "Actuarial  tables"  means  such tables as shall have been adopted by
 25    the board in accordance with recommendations of the actuary.
 26        (5A)  "Alternate payee" means a spouse or former spouse of a member who is
 27    recognized by an approved domestic retirement order as having a right  to  all
 28    or  a portion of the accrued benefits in the retirement system with respect to
 29    such member.
 30        (5B)  "Approved domestic retirement order"  means  a  domestic  retirement
 31    order  which creates or recognizes the existence of an alternate payee's right
 32    or assigns to an alternate payee the right to all or a portion of the  accrued
 33    benefits  of a member under the retirement system, which directs the system to
 34    establish a segregated account or disburse benefits to an alternate payee, and
 35    which the executive director of the retirement system has determined meets the
 36    requirements of sections 59-1319 and 59-1320, Idaho Code.
 37        (5C)  "Average monthly salary" means the member's  average  salary  during
 38    the  base  period  as  calculated  pursuant to rules adopted by the retirement
 39    board.
 40        (5D)  (a)  "Base period" means the period of fifty-four  (54)  consecutive
 41        calendar months during which the member earned:
 42             (i)   The highest average salary; and
 43             (ii)  Membership  service  of  at  least one-half (1/2) the number of
  1             months in the period, excluding months of service attributable to:
  2                  A.  Military service;
  3                  B.  Service qualifying as minimum benefit  pursuant  to  section
  4                  59-1342(5), Idaho Code; and
  5                  C.  Worker's compensation income benefits.
  6        (b)  Effective  October  1, 1993, the consecutive calendar months shall be
  7        forty-eight (48). Effective October  1,  1994,  the  consecutive  calendar
  8        months shall be forty-two (42).
  9        (c)  Entitlement  to a base period shall not vest until the effective date
 10        of that base period. The retirement benefits shall be  calculated  on  the
 11        amounts, terms and conditions in effect at the date of the final contribu-
 12        tion by the member.
 13        (d)  If  no  base period exists for a member, the member's average monthly
 14        salary shall be determined by the board, using standards not  inconsistent
 15        with those established in this subsection.
 16        (e)  To  assure  equitable  treatment  for  all members, salary increments
 17        inconsistent with usual compensation patterns may  be  disallowed  by  the
 18        board in determining average monthly salary and base period.
 19        (6)  "Beneficiary" means the person who is nominated by the written desig-
 20    nation  of  a  member,  duly executed and filed with the board, to receive the
 21    death benefit.
 22        (7)  "Calendar year" means twelve (12) calendar months commencing  on  the
 23    first day of January.
 24        (7A) "Contingent  annuitant" means the person designated by a member under
 25    certain retirement options to receive benefit payments upon the death  of  the
 26    member. The person so designated must be born and living on the effective date
 27    of retirement.
 28        (8)  "Credited  service"  means the aggregate of membership service, prior
 29    service and disabled service.
 30        (9)  "Date of establishment" means July 1, 1965, or a  later  date  estab-
 31    lished by the board or statute.
 32        (10) "Death benefit" means the amount, if any, payable upon the death of a
 33    member.
 34        (11) "Disability retirement allowance" means the periodic payment becoming
 35    payable  upon  an active member's ceasing to be an employee while eligible for
 36    disability retirement.
 37        (12) "Disabled" means:
 38        (a)  That the member is prevented  from  engaging  in  any  occupation  or
 39        employment for remuneration or profit as a result of bodily injury or dis-
 40        ease,  either occupational or nonoccupational in cause, but excluding dis-
 41        abilities resulting from service in the armed forces of  any  country,  or
 42        from an intentionally self-inflicted injury; and
 43        (b)  That  the  member will likely remain so disabled permanently and con-
 44        tinuously during the remainder of the member's life.
 45    It is not necessary that a person be absolutely helpless or entirely unable to
 46    do anything worthy of compensation to be considered disabled. If the person is
 47    so disabled that substantially all the avenues of  employment  are  reasonably
 48    closed  to  the person, that condition is within the meaning of "disabled." In
 49    evaluating whether a person is disabled, medical factors and  nonmedical  fac-
 50    tors  including,  but  not limited to, education, economic and social environ-
 51    ment, training and usable skills may be considered.
 52        Refusal to submit to a medical examination ordered by the board before the
 53    commencement of a disability retirement allowance or at  any  reasonable  time
 54    thereafter  shall  constitute proof that the member is not disabled. The board
 55    shall be empowered to select for such medical examination one (1) or more phy-
  1    sicians or surgeons who are licensed to practice medicine and perform surgery.
  2    The fees and expenses of such examination shall be paid from  the  administra-
  3    tion account of the fund. No member shall be required to undergo such examina-
  4    tion more often than once each year after he has received a disability retire-
  5    ment allowance continuously for two (2) years.
  6        (12A) "Disabled  service"  means  the total number of months elapsing from
  7    the first day of the month next succeeding the final contribution of a  member
  8    prior  to  receiving a disability retirement allowance to the first day of the
  9    month following the date of termination of such disability  retirement  allow-
 10    ance. During such period, the member shall remain classified in the membership
 11    category  held  during  the  month  of final contribution. The total number of
 12    months of disabled service credited for a person first becoming disabled after
 13    the effective date of this chapter shall not exceed the  excess,  if  any,  of
 14    three hundred sixty (360) over the total number of months of prior service and
 15    membership service.
 16        (12B) "Domestic  retirement  order"  means any judgment, decree, or order,
 17    including approval of a property settlement agreement  which  relates  to  the
 18    provision of marital property rights to a spouse or former spouse of a member,
 19    and  is  made  pursuant  to  a domestic relations law, including the community
 20    property law of the state of Idaho or of another state.
 21        (13) "Early retirement allowance" means the periodic payment becoming pay-
 22    able upon an active member's ceasing to be  an  employee  while  eligible  for
 23    early retirement.
 24        (14) (A)  "Employee" means:
 25        (a)  Any  person who normally works twenty (20) hours or more per week for
 26        an employer or a school  teacher  who  works  half-time  or  more  for  an
 27        employer  and who receives salary for services rendered for such employer;
 28        or
 29        (b)  Elected officials or appointed officials of an employer who receive a
 30        salary; or
 31        (c)  A person who is separated from service with less than five  (5)  con-
 32        secutive  months  of employment and who is reemployed or reinstated by the
 33        same employer within thirty (30) days.
 34        (B)  "Employee" does not include employment as:
 35        (a)  A person rendering service to an employer in the capacity of an inde-
 36        pendent business, trade or profession; or
 37        (b)  A person whose employment with any employer does not total  five  (5)
 38        consecutive months; or
 39        (c)  A  person  provided  sheltered  employment  or  made-work by a public
 40        employer in an employment or industries program maintained for the benefit
 41        of such person; or
 42        (d)  An inmate of a state institution, whether or not receiving  compensa-
 43        tion for services performed for the institution; or
 44        (e)  A  student  enrolled  in an undergraduate, graduate, or professional-
 45        technical program at and employed by a state college,  university,  commu-
 46        nity  college  or  professional-technical  center  when such employment is
 47        predicated on student status; or
 48        (f)  A person making contributions to the United States civil service com-
 49        mission under the United States Civil Service System Retirement Act except
 50        that a person who receives separate remuneration for work  currently  per-
 51        formed  for an employer and the United States government may elect to be a
 52        member of the retirement system in accordance with rules of the board; or
 53        (g)  A person occupying a position that does not exceed eight (8) consecu-
 54        tive months in a calendar year with a city or  county  when  the  city  or
 55        county  has  certified, in writing to the system, the position is (i) sea-
  1        sonal or casual; and (ii) affected by  weather  and  the  growing  season,
  2        including parks and golf course positions.
  3        (15) "Employer" means the state of Idaho, or any political subdivision or
  4    governmental  entity,  provided such subdivision or entity has elected to come
  5    into the system. Governmental entity means any organization composed of  units
  6    of  government of Idaho or organizations funded only by government or employee
  7    contributions or organizations who discharge governmental responsibilities  or
  8    proprietary  responsibilities that would otherwise be performed by government.
  9    All governmental entities are deemed to be political subdivisions for the pur-
 10    pose of this chapter.
 11        (15A) "Final contribution" means the final contribution made by  a  member
 12    pursuant to sections 59-1331 through 59-1334, Idaho Code.
 13        (16) "Firefighter" means an employee, including paid firefighters hired on
 14    or  after  October 1, 1980, whose primary occupation is that of preventing and
 15    extinguishing fires as determined by the rules of the board.
 16        (17) "Fiscal year" means the period beginning on July 1 in  any  year  and
 17    ending on June 30 of the next succeeding year.
 18        (18) "Fund"  means the public employee retirement fund established by this
 19    chapter.
 20        (19) "Funding agent" means any bank or banks, trust company or trust  com-
 21    panies,  legal  reserve life insurance company or legal reserve life insurance
 22    companies, or combinations thereof, any thrift institution or credit union  or
 23    any   investment  management firm or individual investment manager selected by
 24    the board to hold and/or invest the employers' and members' contributions  and
 25    pay certain benefits granted under this chapter.
 26        (20) "Inactive member" means a former active member who is not an employee
 27    and  is not receiving any form of retirement allowance, but for whom a separa-
 28    tion benefit has not become payable.
 29        (20A) "Lifetime annuity" means periodic monthly payments of income by  the
 30    retirement system to an alternate payee.
 31        (20B) "Lump  sum distribution" means a payment by the retirement system of
 32    the entire balance in the alternate payee's segregated account, together  with
 33    regular interest credited thereon.
 34        (21) "Member" means an active member, inactive member or a retired member.
 35        (22) "Membership  service"  means  military service which occurs after the
 36    commencement of contributions payable under sections 59-1331 through  59-1334,
 37    Idaho  Code, and service with respect to which contributions are payable under
 38    sections 59-1331 through 59-1334, Idaho Code, which, except for benefit calcu-
 39    lations described in sections 59-1342 and 59-1353, Idaho Code,  includes  ser-
 40    vice transferred to a segregated account under an approved domestic retirement
 41    order.
 42        (23) "Military  service"  means active duty service in the armed forces of
 43    the United States including the national guard and reserves, under the  provi-
 44    sions  of title 10, title 32, and title 37, United States code. Provided, how-
 45    ever, for the purposes of this chapter, military service SHALL NOT include:
 46        (a)  Any period ended by dishonorable discharge or during  which  termina-
 47        tion of such service is available but not accepted;
 48        (b)  Any  period which commences more than ninety (90) days after the per-
 49        son ceases to be an employee or ends more than ninety (90) days before the
 50        person again becomes an employee unless such ninety (90) day  requirements
 51        are  waived  by  the board due to circumstances beyond the employee's con-
 52        trol; or
 53        (c)  Any active duty service in excess of five (5) years if at the  conve-
 54        nience  of the United States government, or in excess of four (4) years if
 55        not at the convenience of the United States government.
  1        (24)  (a) "Police officer" for retirement purposes shall be as defined  in
  2        section 59-1303, Idaho Code.
  3        (b)  "POST"  means  the Idaho peace officer standards and training council
  4        established in chapter 51, title 19, Idaho Code.
  5        (25) "Prior service" means any period prior to July 1, 1965,  of  military
  6    service  or  of employment for the state of Idaho or any political subdivision
  7    or other employer of each employee who is an active member or in military ser-
  8    vice or on leave of absence on the date of establishment,  provided,  however,
  9    an employee who was not an active member or in military service or on leave of
 10    absence  on  the  date  of establishment shall receive credit for the member's
 11    service prior to July 1, 1965, on the basis of recognizing two (2)  months  of
 12    such  service for each month of membership service. For the purpose of comput-
 13    ing such service, no deduction shall be made  for  any  continuous  period  of
 14    absence from service or military service of six (6) months or less.
 15        (26) "Regular  interest"  means interest at the rate set from time to time
 16    by the board.
 17        (27) "Retired member" means a former active member receiving a  retirement
 18    allowance.
 19        (28) "Retirement"  means  the  acceptance  of a retirement allowance under
 20    this chapter upon termination of employment.
 21        (29) "Retirement board" or "board" means the board provided  for  in  sec-
 22    tions 59-1304 and 59-1305, Idaho Code, to administer the retirement system.
 23        (30) "Retirement  system" or "system" means the public employee retirement
 24    system of Idaho.
 25        (31) (A)  "Salary" means:
 26        (a)  The total salary or wages paid to a person who meets  the  definition
 27        of  employee  by an employer for  personal services performed and reported
 28        by the employer for income tax purposes, including the cash value  of  all
 29        remuneration in any medium other than cash.
 30        (b)  The  total  amount  of any voluntary reduction in salary agreed to by
 31        the member and employer where the reduction is used as an alternative form
 32        of remuneration to the member.
 33        (B)  Salary in excess of the compensation limitations set forth in section
 34    401(a)(17) of the Internal Revenue Code shall be disregarded  for  any  person
 35    who becomes a member of the system on or after July 1, 1996. The system had no
 36    limitations  on compensation in effect on July 1, 1993. The compensation limi-
 37    tations set forth in section 401(1a)(17) of the Internal  Revenue  Code  shall
 38    not  apply  for  an  "eligible  employee."  For  purposes  of this subsection,
 39    "eligible employee" is an individual who was a member  of  the  system  before
 40    July 1, 1996.
 41        (C)  "Salary" does not include:
 42        (a)  Contributions by employers to employee held medical savings accounts,
 43        as those accounts are defined in section 63-3022K, Idaho Code.
 44        (b)  Lump  sum payments inconsistent with usual compensation patterns made
 45        by the employer to the employee only upon termination from service includ-
 46        ing, but not limited to,  vacation  payoffs,  sick  leave  payoffs,  early
 47        retirement incentive payments and bonuses.
 48        (31A) "Segregated account" means the account established by the retirement
 49    system  for  the  alternate  payee of a member who is not a retired member. It
 50    shall include the months of credited  service  and  accumulated  contributions
 51    transferred from the member's account.
 52        (32) "Separation benefit" means the amount, if any, payable upon or subse-
 53    quent to separation from service.
 54        (33) "Service"  means  being shown on an employer's payroll as an employee
 55    receiving a salary. For each calendar month, service is credited only  when  a
  1    member  is an employee as defined in subsection (14)(A) of this section and is
  2    employed for fifteen (15) days or more during the calendar  month.  Employment
  3    of fourteen (14) days or less during any calendar month shall not be credited.
  4    No more than one (1) month of service shall be credited for all service in any
  5    month.
  6        (34) "Service  retirement  allowance"  means the periodic payment becoming
  7    payable upon an active member's ceasing to be an employee while  eligible  for
  8    service retirement.
  9        (35) "State" means the state of Idaho.
 10        (36) "Vested  member"  means an active or inactive member who has at least
 11    five (5) years of credited service, except that a member, who at the  time  of
 12    his separation from service:
 13        (a)  Held an office to which he had been elected by popular vote or having
 14        a  term  fixed by the constitution, statute or charter or was appointed to
 15        such office by an elected official; or
 16        (b)  Was the head or director of a department, division, agency, statutory
 17        section or bureau of the state; or
 18        (c)  Was employed on or after July 1, 1965, by an elected official of  the
 19        state of Idaho and occupied a position exempt from the provisions of chap-
 20        ter 53, title 67, Idaho Code; and
 21        (d)  Was  not  covered  by  a  merit  system for employees of the state of
 22        Idaho,
 23    is vested without regard to the length of credited service.
 24        (37) The masculine pronoun, wherever used, shall include the feminine pro-
 25    noun.
 26        SECTION 2.  An emergency existing  therefor,  which  emergency  is  hereby
 27    declared to exist, this act shall be in full force and effect on and after its
 28    passage and approval.

Statement of Purpose / Fiscal Impact

                     STATEMENT OF PURPOSE

                            RS#: 11512
Periodically, the Public Employee Retirement System of Idaho 
(PERSI) requests a determination from the IRS that the retirement 
plans under its administration continue to meet the requirements of 
section 401(a) of the Internal Revenue Code.  In the most recent 
request, the IRS conditioned a favorable letter of determination 
upon, inter alia, amending an incorrect citation to section 401(a) 
of the IRS Code contained in section 59-1302(31), Idaho Code.  Such 
amendments must be adopted within 6 months of the determination 
letter to be effective, so an emergency clause is also necessary.

                         FISCAL IMPACT


Name:  Alan Winkle
Agency:     PERSI
Phone: 334-3365

Statement of Purpose/Fiscal Impact                  S 1303