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S1446......................................................by STATE AFFAIRS
PUBLIC EMPLOYEE RETIREMENT SYSTEM - MILITARY SERVICE - Amends existing law
relating to the Public Employee Retirement System to further define
"military service."
03/15 Senate intro - 1st rdg - to printing
03/16 Rpt prt - to St Aff
Rpt out - rec d/p - to 2nd rdg
03/17 2nd rdg - to 3rd rdg
03/18 3rd rdg - PASSED - 26-0-9
AYES -- Andreason, Bailey, Bunderson, Burkett, Burtenshaw,
Darrington, Gannon, Goedde, Hill, Ingram, Kennedy, Keough, Little,
Lodge, Malepeai, Marley, McKenzie, McWilliams, Noble, Noh, Pearce,
Richardson, Sorensen, Sweet, Werk, Williams
NAYS -- None
Absent and excused -- Brandt, Calabretta, Cameron, Compton, Davis,
Geddes, Schroeder, Stegner, Stennett
Floor Sponsor - Bailey
Title apvd - to House
03/18 House intro - 1st rdg - to Com/HuRes
03/19 Rpt out - rec d/p - to 2nd rdg
03/20 2nd rdg - to 3rd rdg
Rls susp - PASSED - 60-0-10
AYES -- Andersen, Barraclough, Barrett, Bayer, Bedke, Bell, Black,
Block, Boe, Bolz, Campbell, Cannon, Collins, Crow, Cuddy, Deal,
Denney, Douglas, Edmunson, Ellsworth, Eskridge, Field(18), Field(23),
Gagner, Garrett, Henbest, Jaquet, Jones, Kellogg, Kulczyk, Lake,
Langford, Langhorst, Martinez, McGeachin, McKague, Meyer, Miller,
Mitchell, Moyle, Naccarato, Nielsen, Pasley-Stuart, Raybould, Ring,
Ringo, Robison, Rydalch, Sali, Sayler, Schaefer, Shepherd, Shirley,
Skippen, Smith(30), Smylie, Snodgrass, Wills, Wood, Mr. Speaker
NAYS -- None
Absent and excused -- Bauer, Bradford, Clark, Eberle, Harwood,
Ridinger, Roberts, Smith(24), Stevenson, Trail
Floor Sponsor - Schaefer
Title apvd - to Senate
03/20 To enrol
03/22 Rpt enrol - Pres signed - Sp signed
To Governor
03/23 Governor signed
Session Law Chapter 232
Effective: 03/23/04
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-seventh Legislature Second Regular Session - 2004
IN THE SENATE
SENATE BILL NO. 1446
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO THE PUBLIC EMPLOYEE RETIREMENT SYSTEM; AMENDING SECTION 59-1302,
3 IDAHO CODE, TO FURTHER DEFINE "MILITARY SERVICE"; AND DECLARING AN EMER-
4 GENCY.
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 the
38 base period as calculated pursuant to rules adopted by the retirement board.
39 (5D) (a) "Base period" means the period of fifty-four (54) consecutive
40 calendar months during which the member earned:
41 (i) The highest average salary; and
42 (ii) Membership service of at least one-half (1/2) the number of
43 months in the period, excluding months of service attributable to:
2
1 A. Military service;
2 B. Service qualifying as minimum benefit pursuant to section
3 59-1342(5), Idaho Code; and
4 C. Worker's compensation income benefits.
5 (b) Effective October 1, 1993, the consecutive calendar months shall be
6 forty-eight (48). Effective October 1, 1994, the consecutive calendar
7 months shall be forty-two (42).
8 (c) Entitlement to a base period shall not vest until the effective date
9 of that base period. The retirement benefits shall be calculated on the
10 amounts, terms and conditions in effect at the date of the final contribu-
11 tion by the member.
12 (d) If no base period exists for a member, the member's average monthly
13 salary shall be determined by the board, using standards not inconsistent
14 with those established in this subsection.
15 (e) To assure equitable treatment for all members, salary increments
16 inconsistent with usual compensation patterns may be disallowed by the
17 board in determining average monthly salary and base period.
18 (6) "Beneficiary" means the person who is nominated by the written desig-
19 nation of a member, duly executed and filed with the board, to receive the
20 death benefit.
21 (7) "Calendar year" means twelve (12) calendar months commencing on the
22 first day of January.
23 (7A) "Contingent annuitant" means the person designated by a member under
24 certain retirement options to receive benefit payments upon the death of the
25 member. The person so designated must be born and living on the effective date
26 of retirement.
27 (8) "Credited service" means the aggregate of membership service, prior
28 service and disabled service.
29 (9) "Date of establishment" means July 1, 1965, or a later date estab-
30 lished by the board or statute.
31 (10) "Death benefit" means the amount, if any, payable upon the death of a
32 member.
33 (11) "Disability retirement allowance" means the periodic payment becoming
34 payable upon an active member's ceasing to be an employee while eligible for
35 disability retirement.
36 (12) "Disabled" means:
37 (a) That the member is prevented from engaging in any occupation or
38 employment for remuneration or profit as a result of bodily injury or dis-
39 ease, either occupational or nonoccupational in cause, but excluding dis-
40 abilities resulting from service in the armed forces of any country, or
41 from an intentionally self-inflicted injury; and
42 (b) That the member will likely remain so disabled permanently and con-
43 tinuously during the remainder of the member's life.
44 It is not necessary that a person be absolutely helpless or entirely unable to
45 do anything worthy of compensation to be considered disabled. If the person is
46 so disabled that substantially all the avenues of employment are reasonably
47 closed to the person, that condition is within the meaning of "disabled." In
48 evaluating whether a person is disabled, medical factors and nonmedical fac-
49 tors including, but not limited to, education, economic and social environ-
50 ment, training and usable skills may be considered.
51 Refusal to submit to a medical examination ordered by the board before the
52 commencement of a disability retirement allowance or at any reasonable time
53 thereafter shall constitute proof that the member is not disabled. The board
54 shall be empowered to select for such medical examination one (1) or more phy-
55 sicians or surgeons who are licensed to practice medicine and perform surgery.
3
1 The fees and expenses of such examination shall be paid from the administra-
2 tion account of the fund. No member shall be required to undergo such examina-
3 tion more often than once each year after he has received a disability retire-
4 ment allowance continuously for two (2) years.
5 (12A) "Disabled service" means the total number of months elapsing from
6 the first day of the month next succeeding the final contribution of a member
7 prior to receiving a disability retirement allowance to the first day of the
8 month following the date of termination of such disability retirement allow-
9 ance. During such period, the member shall remain classified in the membership
10 category held during the month of final contribution. The total number of
11 months of disabled service credited for a person first becoming disabled after
12 the effective date of this chapter shall not exceed the excess, if any, of
13 three hundred sixty (360) over the total number of months of prior service and
14 membership service.
15 (12B) "Domestic retirement order" means any judgment, decree, or order,
16 including approval of a property settlement agreement which relates to the
17 provision of marital property rights to a spouse or former spouse of a member,
18 and is made pursuant to a domestic relations law, including the community
19 property law of the state of Idaho or of another state.
20 (13) "Early retirement allowance" means the periodic payment becoming pay-
21 able upon an active member's ceasing to be an employee while eligible for
22 early retirement.
23 (14) (A) "Employee" means:
24 (a) Any person who normally works twenty (20) hours or more per week for
25 an employer or a school teacher who works half-time or more for an
26 employer and who receives salary for services rendered for such employer;
27 or
28 (b) Elected officials or appointed officials of an employer who receive a
29 salary; or
30 (c) A person who is separated from service with less than five (5) con-
31 secutive months of employment and who is reemployed or reinstated by the
32 same employer within thirty (30) days.
33 (B) "Employee" does not include employment as:
34 (a) A person rendering service to an employer in the capacity of an inde-
35 pendent business, trade or profession; or
36 (b) A person whose employment with any employer does not total five (5)
37 consecutive months; or
38 (c) A person provided sheltered employment or made-work by a public
39 employer in an employment or industries program maintained for the benefit
40 of such person; or
41 (d) An inmate of a state institution, whether or not receiving compensa-
42 tion for services performed for the institution; or
43 (e) A student enrolled in an undergraduate, graduate, or professional-
44 technical program at and employed by a state college, university, commu-
45 nity college or professional-technical center when such employment is
46 predicated on student status; or
47 (f) A person making contributions to the United States civil service com-
48 mission under the United States Civil Service System Retirement Act except
49 that a person who receives separate remuneration for work currently per-
50 formed for an employer and the United States government may elect to be a
51 member of the retirement system in accordance with rules of the board; or
52 (g) A person occupying a position that does not exceed eight (8) consecu-
53 tive months in a calendar year with a city or county when the city or
54 county has certified, in writing to the system, the position is (i) sea-
55 sonal or casual; and (ii) affected by weather and the growing season,
4
1 including parks and golf course positions.
2 (15) "Employer" means the state of Idaho, or any political subdivision or
3 governmental entity, provided such subdivision or entity has elected to come
4 into the system. Governmental entity means any organization composed of units
5 of government of Idaho or organizations funded only by government or employee
6 contributions or organizations who discharge governmental responsibilities or
7 proprietary responsibilities that would otherwise be performed by government.
8 All governmental entities are deemed to be political subdivisions for the pur-
9 pose of this chapter.
10 (15A) "Final contribution" means the final contribution made by a member
11 pursuant to sections 59-1331 through 59-1334, Idaho Code.
12 (16) "Firefighter" means an employee, including paid firefighters hired on
13 or after October 1, 1980, whose primary occupation is that of preventing and
14 extinguishing fires as determined by the rules of the board.
15 (17) "Fiscal year" means the period beginning on July 1 in any year and
16 ending on June 30 of the next succeeding year.
17 (18) "Fund" means the public employee retirement fund established by this
18 chapter.
19 (19) "Funding agent" means any bank or banks, trust company or trust com-
20 panies, legal reserve life insurance company or legal reserve life insurance
21 companies, or combinations thereof, any thrift institution or credit union or
22 any investment management firm or individual investment manager selected by
23 the board to hold and/or invest the employers' and members' contributions and
24 pay certain benefits granted under this chapter.
25 (20) "Inactive member" means a former active member who is not an employee
26 and is not receiving any form of retirement allowance, but for whom a separa-
27 tion benefit has not become payable.
28 (20A) "Lifetime annuity" means periodic monthly payments of income by the
29 retirement system to an alternate payee.
30 (20B) "Lump sum distribution" means a payment by the retirement system of
31 the entire balance in the alternate payee's segregated account, together with
32 regular interest credited thereon.
33 (21) "Member" means an active member, inactive member or a retired member.
34 (22) "Membership service" means military service which occurs after the
35 commencement of contributions payable under sections 59-1331 through 59-1334,
36 Idaho Code, and service with respect to which contributions are payable under
37 sections 59-1331 through 59-1334, Idaho Code, which, except for benefit calcu-
38 lations described in sections 59-1342 and 59-1353, Idaho Code, includes ser-
39 vice transferred to a segregated account under an approved domestic retirement
40 order.
41 (23) "Military service" means any period of active duty service in the
42 armed forces of the United States including the national guard and reserves,
43 under the provisions of title 10, title 32, and title 37, United States code,
44 which commences less than ninety (90) days after the person ceases to be an
45 employee and ends less than ninety (90) days before the person again becomes
46 an employee. Provided, however, for the purposes of this chapter, military
47 service SHALL NOT if a member fails to again become an employee due to being
48 killed while in active duty service, the member shall be entitled to military
49 service through the date of death. In no event shall military service include:
50 (a) Any period ended by dishonorable discharge or during which termina-
51 tion of such service is available but not accepted; or
52 (b) Any period which commences more than ninety (90) days after the per-
53 son ceases to be an employee or ends more than ninety (90) days before the
54 person again becomes an employee unless such ninety (90) day requirements
55 are waived by the board due to circumstances beyond the employee's con-
5
1 trol; or
2 (c) Any active duty service in excess of five (5) years if at the conve-
3 nience of the United States government, or in excess of four (4) years if
4 not at the convenience of the United States government.
5 (24) (a) "Police officer" for retirement purposes shall be as defined in
6 section 59-1303, Idaho Code.
7 (b) "POST" means the Idaho peace officer standards and training council
8 established in chapter 51, title 19, Idaho Code.
9 (25) "Prior service" means any period prior to July 1, 1965, of military
10 service or of employment for the state of Idaho or any political subdivision
11 or other employer of each employee who is an active member or in military ser-
12 vice or on leave of absence on the date of establishment, provided, however,
13 an employee who was not an active member or in military service or on leave of
14 absence on the date of establishment shall receive credit for the member's
15 service prior to July 1, 1965, on the basis of recognizing two (2) months of
16 such service for each month of membership service. For the purpose of comput-
17 ing such service, no deduction shall be made for any continuous period of
18 absence from service or military service of six (6) months or less.
19 (26) "Regular interest" means interest at the rate set from time to time
20 by the board.
21 (27) "Retired member" means a former active member receiving a retirement
22 allowance.
23 (28) "Retirement" means the acceptance of a retirement allowance under
24 this chapter upon termination of employment.
25 (29) "Retirement board" or "board" means the board provided for in sec-
26 tions 59-1304 and 59-1305, Idaho Code, to administer the retirement system.
27 (30) "Retirement system" or "system" means the public employee retirement
28 system of Idaho.
29 (31) (A) "Salary" means:
30 (a) The total salary or wages paid to a person who meets the definition
31 of employee by an employer for personal services performed and reported
32 by the employer for income tax purposes, including the cash value of all
33 remuneration in any medium other than cash.
34 (b) The total amount of any voluntary reduction in salary agreed to by
35 the member and employer where the reduction is used as an alternative form
36 of remuneration to the member.
37 (B) Salary in excess of the compensation limitations set forth in section
38 401(a)(17) of the Internal Revenue Code shall be disregarded for any person
39 who becomes a member of the system on or after July 1, 1996. The system had no
40 limitations on compensation in effect on July 1, 1993. The compensation limi-
41 tations set forth in section 401(a)(17) of the Internal Revenue Code shall not
42 apply for an "eligible employee." For purposes of this subsection, "eligible
43 employee" is an individual who was a member of the system before July 1, 1996.
44 (C) "Salary" does not include:
45 (a) Contributions by employers to employee held medical savings accounts,
46 as those accounts are defined in section 63-3022K, Idaho Code.
47 (b) Lump sum payments inconsistent with usual compensation patterns made
48 by the employer to the employee only upon termination from service includ-
49 ing, but not limited to, vacation payoffs, sick leave payoffs, early
50 retirement incentive payments and bonuses.
51 (31A) "Segregated account" means the account established by the retirement
52 system for the alternate payee of a member who is not a retired member. It
53 shall include the months of credited service and accumulated contributions
54 transferred from the member's account.
55 (32) "Separation benefit" means the amount, if any, payable upon or subse-
6
1 quent to separation from service.
2 (33) "Service" means being shown on an employer's payroll as an employee
3 receiving a salary. For each calendar month, service is credited only when a
4 member is an employee as defined in subsection (14)(A) of this section and is
5 employed for fifteen (15) days or more during the calendar month. Employment
6 of fourteen (14) days or less during any calendar month shall not be credited.
7 No more than one (1) month of service shall be credited for all service in any
8 month.
9 (34) "Service retirement allowance" means the periodic payment becoming
10 payable upon an active member's ceasing to be an employee while eligible for
11 service retirement.
12 (35) "State" means the state of Idaho.
13 (36) "Vested member" means an active or inactive member who has at least
14 five (5) years of credited service, except that a member, who at the time of
15 his separation from service:
16 (a) Held an office to which he had been elected by popular vote or having
17 a term fixed by the constitution, statute or charter or was appointed to
18 such office by an elected official; or
19 (b) Was the head or director of a department, division, agency, statutory
20 section or bureau of the state; or
21 (c) Was employed on or after July 1, 1965, by an elected official of the
22 state of Idaho and occupied a position exempt from the provisions of chap-
23 ter 53, title 67, Idaho Code; and
24 (d) Was not covered by a merit system for employees of the state of
25 Idaho,
26 is vested without regard to the length of credited service.
27 (37) The masculine pronoun, wherever used, shall include the feminine pro-
28 noun.
29 SECTION 2. An emergency existing therefor, which emergency is hereby
30 declared to exist, this act shall be in full force and effect on and after its
31 passage and approval.
STATEMENT OF PURPOSE
RS 14267
This bill makes a minor change to the definition of PERSI
Military Service to address inequity in the crediting of military
service. This change will ensure that Military Service will be
credited for calculation of both regular retirement benefits as
well as for survivor benefits.
FISCAL IMPACT
The impact to the General Fund and retirement system funds is
considered negligible. This is because the PERSI actuary does
not assume any incidence of military service for cost purposes of
program benefits since it represents such a small fraction of the
entire fund's assets. To the extent that there would be a cost
associated with the benefit provided in this bill, it would be
included in the annual valuation and amortized with any other
liability. Therefore, the fiscal impact of this legislation is
indeterminate due to its extremely small impact.
Contact
Name: Senator Kent Bailey
Alan Winkle, PERSI
Phone: 334-2455
STATEMENT OF PURPOSE/FISCAL NOTE S 1446