2007 Legislation
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SENATE BILL NO. 1001 – PERSI, membership, purchase


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Bill Status

S1001.......................................by COMMERCE AND HUMAN RESOURCES
PUBLIC EMPLOYEE RETIREMENT SYSTEM - Amends existing law relating to the
Public Employee Retirement System to reference the ability to purchase
membership service related to certain active duty service in the armed
forces; to revise the date applicable to eligibility for disability
retirement; to clarify separation of service for retired members; to
clarify separation from employment for inactive members; and to provide for
the purchase of membership service relating to a member's active duty
01/12    Senate intro - 1st rdg - to printing
01/15    Rpt prt - to Com/HuRes
02/14    Rpt out - rec d/p - to 2nd rdg
02/15    2nd rdg - to 3rd rdg
02/19    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
      Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Gannon, Geddes,
      Goedde, Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst,
      Little, Lodge, Malepeai, McGee, McKague, McKenzie, Pearce,
      Richardson, Schroeder, Siddoway, Stegner, Stennett, Werk
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Davis
    Title apvd - to House
02/20    House intro - 1st rdg - to Com/HuRes
03/01    Rpt out - rec d/p - to 2nd rdg
03/02    2nd rdg - to 3rd rdg
03/06    3rd rdg - PASSED - 65-0-5
      AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
      Block, Bock, Boe, Bolz, Brackett, Bradford, Chadderdon, Chavez, Chew,
      Clark, Collins, Durst, Edmunson, Eskridge, Hagedorn, Hart, Harwood,
      Henbest, Henderson, Jaquet, Killen, King, Kren, Lake, LeFavour,
      Loertscher, Luker, Marriott, Mathews, Mortimer, Moyle, Nielsen,
      Nonini, Pasley-Stuart, Patrick, Pence, Raybould, Ring, Ringo, Ruchti,
      Rusche, Sayler, Shepherd(2), Shepherd(8), Shirley, Shively,
      Smith(30), Smith(24), Snodgrass, Stevenson, Thayn, Trail, Vander
      Woude, Wills, Wood(27), Wood(35), Mr. Speaker
      NAYS -- None
      Absent and excused -- Crane, Labrador, McGeachin, Roberts, Schaefer
    Floor Sponsor - Bradford
    Title apvd - to Senate
03/07    To enrol
03/08    Rpt enrol - Pres signed - Sp signed
03/09    To Governor
03/12    Governor signed
         Session Law Chapter 44
         Effective: 07/01/07

Bill Text

  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   First Regular Session - 2007
                                       IN THE SENATE
                                    SENATE BILL NO. 1001
  1                                        AN ACT
 13    Be It Enacted by the Legislature of the State of Idaho:
 14        SECTION  1.  That  Section 59-1302, Idaho Code, be, and the same is hereby
 15    amended to read as follows:
 16        59-1302.  DEFINITIONS. (1) As used in this  chapter,  each  of  the  terms
 17    defined  in this section shall have the meaning given in this section unless a
 18    different meaning is clearly required by the context.
 19        (2)  "Active member" means any employee who is not establishing the  right
 20    to  receive  benefits through his or her employer's participation in any other
 21    retirement system established for Idaho public employees, if  such  participa-
 22    tion  is  mandated by applicable Idaho statutes other than this chapter. In no
 23    case will an employee be entitled to any benefit under this chapter for public
 24    service if such employee is establishing retirement  benefit  entitlements  by
 25    other Idaho statutes or federal statutes other than military service or social
 26    security for that same service.
 27        (3)  "Accumulated contributions" means the sum of amounts contributed by a
 28    member of the system, together with regular interest credit thereon.
 29        (4)  "Actuarial equivalent" means a benefit equal in value to another ben-
 30    efit,  when computed upon the basis of the actuarial tables in use by the sys-
 31    tem.
 32        (5)  "Actuarial tables" means such tables as shall have  been  adopted  by
 33    the board in accordance with recommendations of the actuary.
 34        (5A) "Alternate  payee" means a spouse or former spouse of a member who is
 35    recognized by an approved domestic retirement order as having a right  to  all
 36    or  a portion of the accrued benefits in the retirement system with respect to
 37    such member.
 38        (5B) "Approved domestic retirement  order"  means  a  domestic  retirement
 39    order  which creates or recognizes the existence of an alternate payee's right
 40    or assigns to an alternate payee the right to all or a portion of the  accrued
 41    benefits  of a member under the retirement system, which directs the system to
 42    establish a segregated account or disburse benefits to an alternate payee, and
 43    which the executive director of the retirement system has determined meets the
  1    requirements of sections 59-1319 and 59-1320, Idaho Code.
  2        (5C) "Average monthly salary" means the member's average salary during the
  3    base period as calculated pursuant to rules adopted by the retirement board.
  4        (5D) (a) "Base period" means the period  of  fifty-four  (54)  consecutive
  5        calendar months during which the member earned:
  6             (i)   The highest average salary; and
  7             (ii)  Membership  service  of  at  least one-half (1/2) the number of
  8             months in  the period, excluding months of service attributable to:
  9                  A.  Military service;
 10                  B.  Service qualifying as minimum benefit  pursuant  to  section
 11                  59-1342(5), Idaho Code; and
 12                  C.  Worker's compensation income benefits.
 13        (b)  Effective  October  1, 1993, the consecutive calendar months shall be
 14        forty-eight (48). Effective October  1,  1994,  the  consecutive  calendar
 15        months shall be forty-two (42).
 16        (c)  Entitlement  to a base period shall not vest until the effective date
 17        of that base period. The retirement benefits shall be  calculated  on  the
 18        amounts, terms and conditions in effect at the date of the final contribu-
 19        tion by the member.
 20        (d)  If  no  base period exists for a member, the member's average monthly
 21        salary shall be determined by the board, using standards not  inconsistent
 22        with those established in this subsection.
 23        (e)  To  assure  equitable  treatment  for  all members, salary increments
 24        inconsistent with usual compensation patterns may  be  disallowed  by  the
 25        board in determining average monthly salary and base period.
 26        (6)  "Beneficiary" means the person who is nominated by the written desig-
 27    nation  of  a  member,  duly executed and filed with the board, to receive the
 28    death benefit.
 29        (7)  "Calendar year" means twelve (12) calendar months commencing  on  the
 30    first day of January.
 31        (7A) "Contingent  annuitant" means the person designated by a member under
 32    certain retirement options to receive benefit payments upon the death  of  the
 33    member. The person so designated must be born and living on the effective date
 34    of retirement.
 35        (8)  "Credited  service"  means the aggregate of membership service, prior
 36    service and disabled service.
 37        (9)  "Date of establishment" means July 1, 1965, or a  later  date  estab-
 38    lished by the board or statute.
 39        (10) "Death benefit" means the amount, if any, payable upon the death of a
 40    member.
 41        (11) "Disability retirement allowance" means the periodic payment becoming
 42    payable  upon  an active member's ceasing to be an employee while eligible for
 43    disability retirement.
 44        (12) "Disabled" means:
 45        (a)  That the member is prevented  from  engaging  in  any  occupation  or
 46        employment for remuneration or profit as a result of bodily injury or dis-
 47        ease,  either occupational or nonoccupational in cause, but excluding dis-
 48        abilities resulting from service in the armed forces of  any  country,  or
 49        from an intentionally self-inflicted injury; and
 50        (b)  That  the  member will likely remain so disabled permanently and con-
 51        tinuously during the remainder of the member's life.
 52    It is not necessary that a person be absolutely helpless or entirely unable to
 53    do anything worthy of compensation to be considered disabled. If the person is
 54    so disabled that substantially all the avenues of  employment  are  reasonably
 55    closed  to  the person, that condition is within the meaning of "disabled." In
  1    evaluating whether a person is disabled, medical factors and  nonmedical  fac-
  2    tors  including,  but  not limited to, education, economic and social environ-
  3    ment, training and usable skills may be considered.
  4        Refusal to submit to a medical examination ordered by the board before the
  5    commencement of a disability retirement allowance or at  any  reasonable  time
  6    thereafter  shall  constitute proof that the member is not disabled. The board
  7    shall be empowered to select for such medical examination one (1) or more phy-
  8    sicians or surgeons who are licensed to practice medicine and perform surgery.
  9    The fees and expenses of such examination shall be paid from  the  administra-
 10    tion account of the fund. No member shall be required to undergo such examina-
 11    tion more often than once each year after he has received a disability retire-
 12    ment allowance continuously for two (2) years.
 13        (12A) "Disabled  service"  means  the total number of months elapsing from
 14    the first day of the month next succeeding the final contribution of a  member
 15    prior  to  receiving a disability retirement allowance to the first day of the
 16    month following the date of termination of such disability  retirement  allow-
 17    ance. During such period, the member shall remain classified in the membership
 18    category  held  during  the  month  of final contribution. The total number of
 19    months of disabled service credited for a person first becoming disabled after
 20    the effective date of this chapter shall not exceed the  excess,  if  any,  of
 21    three hundred sixty (360) over the total number of months of prior service and
 22    membership service.
 23        (12B) "Domestic  retirement  order"  means any judgment, decree, or order,
 24    including approval of a property settlement agreement  which  relates  to  the
 25    provision of marital property rights to a spouse or former spouse of a member,
 26    and  is  made  pursuant  to  a domestic relations law, including the community
 27    property law of the state of Idaho or of another state.
 28        (13) "Early retirement allowance" means the periodic payment becoming pay-
 29    able upon an active member's ceasing to be  an  employee  while  eligible  for
 30    early retirement.
 31        (14) (A) "Employee" means:
 32        (a)  Any  person who normally works twenty (20) hours or more per week for
 33        an employer or a school  teacher  who  works  half-time  or  more  for  an
 34        employer  and who receives salary for services rendered for such employer;
 35        or
 36        (b)  Elected officials or appointed officials of an employer who receive a
 37        salary; or
 38        (c)  A person who is separated from service with less than five  (5)  con-
 39        secutive  months  of employment and who is reemployed or reinstated by the
 40        same employer within thirty (30) days.
 41        (B)  "Employee" does not include employment as:
 42        (a)  A person rendering service to an employer in the capacity of an inde-
 43        pendent business, trade or profession; or
 44        (b)  A person whose employment with any employer does not total  five  (5)
 45        consecutive months; or
 46        (c)  A  person  provided  sheltered  employment  or  made-work by a public
 47        employer in an employment or industries program maintained for the benefit
 48        of such person; or
 49        (d)  An inmate of a state institution, whether or not receiving  compensa-
 50        tion for services performed for the institution; or
 51        (e)  A  student  enrolled  in an undergraduate, graduate, or professional-
 52        technical program at and employed by a state college,  university,  commu-
 53        nity  college  or  professional-technical  center  when such employment is
 54        predicated on student status; or
 55        (f)  A person making contributions to the United States civil service com-
  1        mission under the United States Civil Service System Retirement Act except
  2        that a person who receives separate remuneration for work  currently  per-
  3        formed  for an employer and the United States government may elect to be a
  4        member of the retirement system in accordance with rules of the board; or
  5        (g)  A person occupying a position that does not exceed eight (8) consecu-
  6        tive months in a calendar year with a city or  county  when  the  city  or
  7        county  has  certified, in writing to the system, the position is (i) sea-
  8        sonal or casual; and (ii) affected by  weather  and  the  growing  season,
  9        including parks and golf course positions; or
 10        (h)  A  person  in a position that (i) is eligible for participation in an
 11        optional retirement program established under section 33-107A or  33-107B,
 12        Idaho  Code,  or  (ii)  would be eligible for participation in an optional
 13        retirement program established under section  33-107A  or  33-107B,  Idaho
 14        Code,  if  the  person  was  not  working less than half-time or less than
 15        twenty (20) hours per week.
 16        (15) "Employer" means the state of Idaho, or any political subdivision  or
 17    governmental  entity,  provided such subdivision or entity has elected to come
 18    into the system. Governmental entity means any organization composed of  units
 19    of  government of Idaho or organizations funded only by government or employee
 20    contributions or organizations who discharge governmental responsibilities  or
 21    proprietary  responsibilities that would otherwise be performed by government.
 22    All governmental entities are deemed to be political subdivisions for the pur-
 23    pose of this chapter.
 24        (15A) "Final contribution" means the final contribution made by  a  member
 25    pursuant to sections 59-1331 through 59-1334, Idaho Code.
 26        (16) "Firefighter" means an employee, including paid firefighters hired on
 27    or  after  October 1, 1980, whose primary occupation is that of preventing and
 28    extinguishing fires as determined by the rules of the board.
 29        (17) "Fiscal year" means the period beginning on July 1 in  any  year  and
 30    ending on June 30 of the next succeeding year.
 31        (18) "Fund"  means the public employee retirement fund established by this
 32    chapter.
 33        (19) "Funding agent" means any bank or banks, trust company or trust  com-
 34    panies,  legal  reserve life insurance company or legal reserve life insurance
 35    companies, or combinations thereof, any thrift institution or credit union  or
 36    any   investment  management firm or individual investment manager selected by
 37    the board to hold and/or invest the employers' and members' contributions  and
 38    pay certain benefits granted under this chapter.
 39        (20) "Inactive member" means a former active member who is not an employee
 40    and  is not receiving any form of retirement allowance, but for whom a separa-
 41    tion benefit has not become payable.
 42        (20A) "Lifetime annuity" means periodic monthly payments of income by  the
 43    retirement system to an alternate payee.
 44        (20B) "Lump  sum distribution" means a payment by the retirement system of
 45    the entire balance in the alternate payee's segregated account, together  with
 46    regular interest credited thereon.
 47        (21) "Member" means an active member, inactive member or a retired member.
 48        (22) "Membership  service"  means  military service which occurs after the
 49    commencement of contributions payable under sections 59-1331 through  59-1334,
 50    Idaho  Code, and service with respect to which contributions are payable under
 51    sections 59-1331 through 59-1334, Idaho Code, which, except for benefit calcu-
 52    lations described in sections 59-1342 and 59-1353, Idaho Code,  includes  ser-
 53    vice transferred to a segregated account under an approved domestic retirement
 54    order.
 55        (23) "Military  service"  means  any  period of active duty service in the
  1    armed forces of the United States including the national guard  and  reserves,
  2    under  the provisions of title 10, title 32, and title 37, United States code,
  3    which commences less than ninety (90) days  after the person ceases to  be  an
  4    employee  and  ends less than ninety (90) days before the person again becomes
  5    an employee. Provided, if a member fails to again become an  employee  due  to
  6    being  killed  while  in  active duty service, the member shall be entitled to
  7    military service through the date of death. In no event shall military service
  8    include:
  9        (a)  Any period ended by dishonorable discharge or during  which  termina-
 10        tion of such service is available but not accepted; or
 11        (b)  Any  active duty service in excess of five (5) years if at the conve-
 12        nience of the United States government, or in excess of four (4) years  if
 13        not  at  the  convenience  of the United States government, provided addi-
 14        tional membership service may be purchased as provided in section 59-1362,
 15        Idaho Code.
 16        (24) (a) "Police officer" for retirement purposes shall be as  defined  in
 17        section 59-1303, Idaho Code.
 18        (b)  "POST"  means  the Idaho peace officer standards and training council
 19        established in chapter 51, title 19, Idaho Code.
 20        (25) "Prior service" means any period prior to July 1, 1965,  of  military
 21    service  or  of employment for the state of Idaho or any political subdivision
 22    or other employer of each employee who is an active member or in military ser-
 23    vice or on leave of absence on the date of establishment,  provided,  however,
 24    an employee who was not an active member or in military service or on leave of
 25    absence  on  the  date  of establishment shall receive credit for the member's
 26    service prior to July 1, 1965, on the basis of recognizing two (2)  months  of
 27    such  service for each month of membership service. For the purpose of comput-
 28    ing such service, no deduction shall be made  for  any  continuous  period  of
 29    absence from service or military service of six (6) months or less.
 30        (26) "Regular  interest"  means interest at the rate set from time to time
 31    by the board.
 32        (27) "Retired member" means a former active member receiving a  retirement
 33    allowance.
 34        (28) "Retirement"  means  the  acceptance  of a retirement allowance under
 35    this chapter upon termination of employment.
 36        (29) "Retirement board" or "board" means the board provided  for  in  sec-
 37    tions 59-1304 and 59-1305, Idaho Code, to administer the retirement system.
 38        (30) "Retirement  system" or "system" means the public employee retirement
 39    system of Idaho.
 40        (31) (A) "Salary" means:
 41        (a)  The total salary or wages paid to a person who meets  the  definition
 42        of  employee  by an employer for  personal services performed and reported
 43        by the employer for income tax purposes, including the cash value  of  all
 44        remuneration in any medium other than cash.
 45        (b)  The  total  amount  of any voluntary reduction in salary agreed to by
 46        the member and employer where the reduction is used as an alternative form
 47        of remuneration to the member.
 48        (B)  Salary in excess of the compensation limitations set forth in section
 49    401(a)(17) of the Internal Revenue Code shall be disregarded  for  any  person
 50    who becomes a member of the system on or after July 1, 1996. The system had no
 51    limitations  on compensation in effect on July 1, 1993. The compensation limi-
 52    tations set forth in section 401(a)(17) of the Internal Revenue Code shall not
 53    apply for an "eligible employee." For purposes of this  subsection,  "eligible
 54    employee" is an individual who was a member of the system before July 1, 1996.
 55        (C)  "Salary" does not include:
  1        (a)  Contributions by employers to employee held medical savings accounts,
  2        as those accounts are defined in section 63-3022K, Idaho Code.
  3        (b)  Lump  sum payments inconsistent with usual compensation patterns made
  4        by the employer to the employee only upon termination from service includ-
  5        ing, but not limited to,  vacation  payoffs,  sick  leave  payoffs,  early
  6        retirement incentive payments and bonuses.
  7        (31A) "Segregated account" means the account established by the retirement
  8    system  for  the  alternate  payee of a member who is not a retired member. It
  9    shall include the months of credited  service  and  accumulated  contributions
 10    transferred from the member's account.
 11        (32) "Separation benefit" means the amount, if any, payable upon or subse-
 12    quent to separation from service.
 13        (33) "Service"  means  being shown on an employer's payroll as an employee
 14    receiving a salary. For each calendar month, service is credited only  when  a
 15    member  is an employee as defined in subsection (14)(A) of this section and is
 16    employed for fifteen (15) days or more during the calendar  month.  Employment
 17    of fourteen (14) days or less during any calendar month shall not be credited.
 18    No more than one (1) month of service shall be credited for all service in any
 19    month.
 20        (34) "Service  retirement  allowance"  means the periodic payment becoming
 21    payable upon an active member's ceasing to be an employee while  eligible  for
 22    service retirement.
 23        (35) "State" means the state of Idaho.
 24        (36) "Vested  member"  means an active or inactive member who has at least
 25    five (5) years of credited service, except that a member, who at the  time  of
 26    his separation from service:
 27        (a)  Held an office to which he had been elected by popular vote or having
 28        a  term  fixed by the constitution, statute or charter or was appointed to
 29        such office by an elected official; or
 30        (b)  Was the head or director of a department, division, agency, statutory
 31        section or bureau of the state; or
 32        (c)  Was employed on or after July 1, 1965, by an elected official of  the
 33        state of Idaho and occupied a position exempt from the provisions of chap-
 34        ter 53, title 67, Idaho Code; and
 35        (d)  Was  not  covered  by  a  merit  system for employees of the state of
 36        Idaho,
 37    is vested without regard to the length of credited service.
 38        (37) The masculine pronoun, wherever used, shall include the feminine pro-
 39    noun.
 40        SECTION 2.  That Section 59-1352, Idaho Code, be, and the same  is  hereby
 41    amended to read as follows:
 42        59-1352.  ELIGIBILITY  FOR  DISABILITY RETIREMENT. (1) An active member is
 43    eligible for disability retirement if the member  becomes  disabled  after  at
 44    least five (5) years of membership service.
 45        (2)  A  police officer member, general member, or a paid firefighter hired
 46    on or after July 1, 1993, who is not eligible for service retirement is eligi-
 47    ble for disability retirement if the member becomes disabled, as  provided  in
 48    section  59-1302(12), Idaho Code, on or after the first day of employment as a
 49    result of bodily injury or disease from an occupational cause.
 50        (3)  Only active members, and inactive members  whose  date  of  last  day
 51    physically  on  the job contribution as an active member was less than one (1)
 52    year prior to the date of application, are eligible to  apply  for  disability
 53    retirement.
  1        SECTION  3.  That  Section 59-1356, Idaho Code, be, and the same is hereby
  2    amended to read as follows:
  3        59-1356.  REEMPLOYMENT OF RETIRED MEMBERS. (1) If an early retired  member
  4    is reemployed with the same employer within ninety (90) days from retiring, or
  5    the early retired member is guaranteed reemployment with the same employer the
  6    member  shall be considered to have continued in the status of an employee and
  7    not to have separated from service. Any retirement allowance payments received
  8    by the retired member shall be repaid to the system and the  retirement  shall
  9    be negated. The month of last contribution prior to the negated retirement and
 10    the month of initial contribution upon return to reemployment shall be consid-
 11    ered  consecutive months of contributions in the determination of an appropri-
 12    ate salary base period upon subsequent retirement. A  retired  member  is  not
 13    considered  to have separated from service if he continues performing services
 14    for the same employer in any capacity including, but not limited to,  indepen-
 15    dent contractor, leased employee, or temporary services.
 16        (2)  Except  as provided in subsection (3) of this section, when a retired
 17    member  meets  the  definition  of  an  employee   as   defined   in   section
 18    59-1302(14)(A)(a),  Idaho  Code,  any benefit payable on behalf of such member
 19    shall be suspended and any contributions payable by such member under sections
 20    59-1331 through 59-1334, Idaho Code, shall again commence. The suspended bene-
 21    fit, as adjusted pursuant to section 59-1355, Idaho Code,  shall  resume  upon
 22    subsequent  retirement,  along with a separate allowance computed with respect
 23    to only that salary and service credited during the  period  of  reemployment.
 24    Any  death  benefit  that becomes payable under the suspended benefit shall be
 25    payable under section 59-1361(2), Idaho Code. Any death benefit  that  becomes
 26    payable  with respect to salary and service accrued during the period of reem-
 27    ployment shall be payable under section 59-1361(3), Idaho Code, if the  member
 28    dies during the period of reemployment.
 29        (3)  If  a  retired member, who is receiving a benefit that is not reduced
 30    under section 59-1346, Idaho Code, and who has been retired for more than  six
 31    (6)  months,  again  becomes  employed  as defined in this section and section
 32    59-1302(14)(A)(b), Idaho Code, as a result of being elected to a public office
 33    other than an office held prior to retirement, the retired member may elect to
 34    continue receiving benefits and not accrue additional service, in which  event
 35    no contributions shall be made by the member or employer during such reemploy-
 36    ment and any benefit payable on behalf of such member shall continue.
 37        (4)  For  purposes of this section, "same employer" means the employer for
 38    which the retired member last worked prior to retirement.
 39        SECTION 4.  That Section 59-1359, Idaho Code, be, and the same  is  hereby
 40    amended to read as follows:
 41        59-1359.  SEPARATION  BENEFITS.  (a) The separation benefit, if any, shall
 42    become payable upon the written request of an inactive  member  who  has  been
 43    separated  from employment. If the person who received a separation benefit is
 44    reemployed or reinstated by the same employer within ninety (90)  days  or  is
 45    guaranteed  a right to employment or reinstatement with the same employer, the
 46    person shall repay to the system any separation benefit paid.
 47        (b)  A separation benefit shall automatically be payable three  (3)  years
 48    after  a  person  becomes  an  inactive member if the inactive member is not a
 49    vested member, has  accumulated contributions of less than one  thousand  dol-
 50    lars ($1,000), and has been separated from employment and is not reemployed or
 51    reinstated by the same employer within ninety (90) days.
 52        (c)  For  purposes  of this section, "separated from employment" means the
  1    inactive member terminated all employment with the employer. An inactive  mem-
  2    ber  is  not considered to have separated from employment if he continues per-
  3    forming services for the same employer in any capacity including, but not lim-
  4    ited to, independent contractor, leased employee, or temporary  services.  For
  5    purposes  of  this  section,  "same employer" means the employer for which the
  6    person last worked prior to being separated from employment.
  7        (d)  Any member may elect to have  eligible  rollover  distributions  paid
  8    directly to a specified eligible retirement plan as required by 26 U.S.C. sec-
  9    tion 401(a)(31).
 10        SECTION  5.  That  Section 59-1362, Idaho Code, be, and the same is hereby
 11    amended to read as follows:
 13    withstanding any other provision of this chapter, an active or inactive member
 14    who  is  vested may purchase membership service for active duty service in the
 15    armed forces of the United States that does not qualify for "military service"
 16    as defined in section 59-1302(23), Idaho Code. Provided, the  combined  amount
 17    of membership service acquired under section 59-1302(23), Idaho Code, and pur-
 18    chased under this section shall not exceed forty-eight (48) months If a member
 19    is entitled to reemployment rights related to the member's active duty service
 20    under  the  uniformed  services employment and reemployment rights act of 1994
 21    (USERRA), as amended, any period of that active duty service that is not  eli-
 22    gible  to  be  credited  as  military service under section 59-1302(23), Idaho
 23    Code, may be credited as membership service if the member pays  employee  con-
 24    tributions for that period as required in this section.
 25        (2)  Purchases  under  this section are limited to active or inactive mem-
 26    bers who provide, as required by the board, evidence of such active duty  ser-
 27    vice  and  who  do not have a vested right to retirement benefits in any other
 28    retirement system based in whole or in part upon the same active duty  service
 29    The member must pay employee contributions or enter into an agreement to do so
 30    and  begin  making payments within ninety (90) days from the date of reemploy-
 31    ment. If the member pays employee contributions or enters into an agreement to
 32    do so, the employer will be responsible for paying employer contributions  for
 33    the same period within thirty (30) days thereafter. Both employee and employer
 34    contributions  will  be based upon compensation the member would have received
 35    but for the period of active duty service.
 36        (3)  The cost of purchases under this section shall be the full  actuarial
 37    costs  of  the  service  as determined by the board. The board may provide for
 38    payment options, including periodic payments, but no service shall be credited
 39    until payment has been made in full. The member shall  be  solely  responsible
 40    for  the costs of such purchased service, except that an employer may partici-
 41    pate in the costs at its option The member may have up to five  (5)  years  to
 42    repay  employee  contributions,  with  interest accruing only from the date of
 43    return from active duty service. If the member terminates employment prior  to
 44    repaying  all  the  employee  contributions  related to the eligible period as
 45    agreed, membership service will be granted only for the period for which  con-
 46    tributions were paid.
 47        (4)  For  purposes  of  this  section,  "active  duty service in the armed
 48    forces  of the United States" means active  duty,  other  than  primarily  for
 49    training  purposes, in the army, navy, air force, marine corps or coast guard,
 50    concluding with other than a dishonorable discharge All periods of active duty
 51    service that do not qualify as "military service" under  section  59-1302(23),
 52    Idaho  Code, or for purchase of membership service under this section, must be
 53    purchased under section 59-1363, Idaho Code.
  1        SECTION 6.  That Section 59-1363, Idaho Code, be, and the same  is  hereby
  2    amended to read as follows:
  3        59-1363.  PURCHASE  OF  MEMBERSHIP  SERVICE. (1) Notwithstanding any other
  4    provision of this chapter, an active or inactive member who is vested may pur-
  5    chase up to forty-eight (48) months of membership service.
  6        (2)  The cost of purchases under this section shall be the full  actuarial
  7    costs  of  the  service  as determined by the board. The board may provide for
  8    payment options, including periodic payments, but no service shall be credited
  9    until payment has been made in full. The member shall  be  solely  responsible
 10    for  the costs of such purchased service, except that an employer may partici-
 11    pate in the costs at its option.
 12        (3)  In no event shall any member be allowed to purchase in the  aggregate
 13    more  than  forty-eight  (48)  months  of membership service whether purchased
 14    under this section. or any other provision authorizing purchase of  membership
 15    service.

Statement of Purpose / Fiscal Impact

                      STATEMENT OF PURPOSE

                           RS 16456C1

This bill contains technical corrections and IRS compliance
amendments as follows:

1. Sections 1, 5, and 6, of the bill implement changes required
by the Uniformed Services Employment and Re-Employment Rights Act
of 1994 (USERRA), as amended, and final regulations recently
issued by the IRS implementing the provisions of that Act. That
act essentially sets forth minimum standards for the treatment of
employees who are called into active duty service in the armed
forces. Employers may be more generous, but not less. One of the
requirements is that upon reemployment the employee is
essentially treated as if he didn t leave for purposes of any
retirement plan. If it is a contributory plan like PERSI, the
employee will receive service if he pays missed contributions.
The PERSI plan actually grants this service (known as military
service) in most cases without payment of any contributions, but
there are cases where a member s active duty service may be
eligible for reemployment rights under USERRA, but not eligible
to be credited as military service under PERSI. The new IRS
regulations make it clear that in these cases, the employer must
credit the additional service upon payment of the employee
contribution. The amendments to sections 59-1302(23), 59-1362,
and 59-1363, Idaho Code, coordinate the granting of military
service (free service), purchase of additional membership service
related to USERRA requirements (based on contributions), and the
purchase of all other service which is based on actuarial costs.
The existing section 59-1362, Idaho Code, is being replaced as it
became superfluous due to the subsequent enactment of section 59-
1363, which provided for purchase of service without underlying
military service based on actuarial costs.

2. Section 2 of the bill is a technical correction to section
59-1352, Idaho Code. Last year this section was amended to add
subsection 3   a time limitation after separating from service
for applying for disability retirement. As initially enacted, the
limitation period begins running "the last day physically on the
job." Using this date has proved to sometimes be problematic in
cases where the member is on worker s compensation or short-term
disability because the limitation period may expire before it is
determined that the member cannot return to work. By changing the
beginning date of the limitation period to "date of last
contribution as an active member," most of these problems will be

3. Sections 3 and 4 of the bill clarify what constitutes a
separation from service or employment consistent with recent
guidance from the IRS. One of the requirements of qualified plans
is that benefits generally cannot be paid until the member
separates from service. A member may separate from service by
death, disability, retiring, or simply terminating employment.
Some employers have permitted employees to change status from an
"employee" to a contractor, a leased employee or a temporary
services employee, in order to make the employee eligible for
retirement plan benefits. The IRS has now indicated that while an
employer may change the status of an employee, that change does
not constitute a "separation from service" for purposes of
receiving benefits under the plan. So, while the contractor,
leased employee or temporary services employee may no longer be
eligible to participate in the plan because of the change in
status, they also are not eligible to receive benefits from the
plan because they have not "separated from service." These
sections of the bill amend sections 59-1356 and 59-1359, Idaho
Code, to make it clear that this practice is not acceptable.

                          FISCAL NOTE
Changes in sections 1, 5, and 6 of bill implementing USERRA
compliance could result in employers paying additional
contributions, but since these contributions would only relate to
specific periods of active duty service not eligible to be
credited as military service under section 59-1302(23), Idaho
Code, it is likely that these circumstances would rarely occur,
and if they did, the periods of service would generally be
relatively short. So, the fiscal impact would be negligible, if

The remaining sections of the bill would have no fiscal impact.

Name:    Alan Winkle
Agency:  PERSI
Phone:   334-2455
STATEMENT OF PURPOSE/FISCAL NOTE                           S 1001