Bill Text: OR SB657 | 2013 | Regular Session | Introduced
Bill Title: Relating to public employee retirement.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Failed) 2013-07-08 - In committee upon adjournment. [SB657 Detail]
Download: Oregon-2013-SB657-Introduced.html
77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 2411
Senate Bill 657
Sponsored by Senator WHITSETT
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Requires public employee to pay 50 percent of contributions to
Public Employees Retirement System required to fund benefits.
Eliminates employer pick-up of employee contribution to
individual account program. Requires public employer and public
employee to each contribute three percent of salary to individual
account program.
A BILL FOR AN ACT
Relating to public employee retirement; creating new provisions;
and amending ORS 238.225, 238.229, 238.660, 238A.005, 238A.220,
238A.330, 238A.335 and 238A.340.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 238.225 is amended to read:
238.225. { + (1) + } { - A participating public employer
shall, at intervals designated by the Public Employees Retirement
Board, transmit to the board those amounts the board determines
to be - } { + Each year, the Public Employees Retirement Board
shall determine the amounts that are + }actuarially necessary to
adequately fund the benefits to be provided { - by the
contributions of the employer - } under this chapter and the
benefits to be provided under the pension program established by
ORS 238A.100 to 238A.245, except for the disability benefit for
which funding is provided under ORS 238A.240. { - From time to
time - } { + Each year + }, the board shall determine the
liabilities of the system and shall set the amount of
contributions to be made { - by participating public employers,
and by other public employers who are required to make
contributions on behalf of members, - } to ensure that those
liabilities will be funded no more than 40 years after the date
on which the determination is made.
{ + (2) At intervals designated by the board:
(a) A public employer shall make contributions totaling 50
percent of the amount of contributions set under subsection (1)
of this section.
(b) An active member shall make employee contributions totaling
50 percent of the amount set under subsection (1) of this
section. + }
SECTION 2. ORS 238A.330 is amended to read:
238A.330. (1) A member of the individual account program must
make employee contributions to the individual account program of
{ - six - } { + three + } percent of the member's salary.
(2) Employee contributions made by a member of the individual
account program under this section shall be credited by the
{ + Public Employees Retirement + } Board to the employee
account established for the member under ORS 238A.350 (2).
SECTION 3. ORS 238A.335 is amended to read:
238A.335. (1) A participating public employer { + shall make
employer contributions of three percent of the member's salary
for a member of the individual account program employed by the
employer. + } { - may agree, by a written employment policy or
by a collective bargaining agreement, to pay the employee
contribution required under ORS 238A.330. The policy or agreement
need not include all members of the individual account program
employed by the employer. - }
{ - (2) An agreement under this section to pay the required
employee contribution may provide that: - }
{ - (a) Employee compensation be reduced to generate the
funds needed to make the employee contributions; or - }
{ - (b) Additional amounts be paid by the employer for the
purpose of making the employee contributions, and employee
compensation not be reduced for the purpose of generating the
funds needed to make the employee contributions. - }
{ - (3) A participating public employer must give written
notice to the Public Employees Retirement Board at the time that
a written employment policy or collective bargaining agreement
described in subsection (1) of this section is adopted or
changed. The notice must specifically indicate whether the
agreement is as described in subsection (2)(a) or (b) of this
section. Any change in the manner in which employee contributions
are to be paid applies only to employee contributions made on and
after the date the notice is received by the board. - }
SECTION 4. ORS 238.229 is amended to read:
238.229. (1) If a participating public employer is grouped with
any other public employer for the purpose of computing employer
contributions under ORS 238.225 and the individual public
employer makes a lump sum payment that is in addition to the
normal employer contribution of the public employer, the Public
Employees Retirement Board shall adjust the amount of employer
contributions to be made by the individual public employer to
ensure that the benefit of the lump sum payment accrues only to
the individual public employer making the payment. An individual
public employer that makes a lump sum payment under the
provisions of this subsection shall remain grouped with other
public employers as provided by ORS 238.227 and 238A.220 for the
purpose of all liabilities of the employer that are not paid
under this subsection. The board by rule may establish a minimum
lump sum payment that must be made by an individual public
employer before adjusting employer contributions under this
subsection. Notwithstanding any minimum lump sum payment
established by the board, the board must allow an individual
public employer to make a lump sum payment under this subsection
if the payment is equal to the full amount of the individual
public employer's accrued unfunded liabilities under this section
and ORS chapter 238A.
(2) The board shall establish a separate account within the
Public Employees Retirement Fund for each lump sum payment made
under this section by an individual public employer. The board
shall credit to each account all interest and other income
received from investment of the account funds during the calendar
year. Except as provided in subsection (3) of this section, the
board may not collect any administrative expense or other charge
from the account or from earnings on the account. { - Except as
provided in subsections (5) and (6) of this section, - } The
account shall be used to offset contributions to the system that
the public employer would otherwise be required to make for the
liabilities against which the lump sum payment is applied.
(3) The board may charge a participating public employer
expenses for administration of an account established under
subsection (2) of this section in an amount not to exceed $2,500
for the calendar year in which the account is established and for
the immediately following two calendar years, and in an amount
not to exceed $1,000 per year for all subsequent years.
(4) If a participating public employer has any liabilities that
are attributable to creditable service by employees of the
employer before the participating public employer was grouped
with other public employers under ORS 238.227, whether under this
section or pursuant to board rule, any lump sum payment made
under this section must be applied first against those
liabilities, with the oldest liability being paid first. Any
amounts remaining after application under this subsection must be
deposited in a separate account established under subsection (2)
of this section.
{ - (5) Except as provided in subsection (6) of this section,
if the board determines at any time after an actuarial study that
the amounts in an account established under subsection (2) of
this section exceed the amounts necessary to fund the employer's
actuarial liabilities under the system, upon request of the
employer, the board shall apply the excess amounts to offset
contributions to the individual account program that the employer
has agreed to pay under ORS 238A.335 or 238A.340. The board may
apply excess amounts to offset contributions to the individual
account program under this subsection only to the extent that the
application will not result in the balance in the account being
reduced to less than the outstanding principal balance owed on
the bonds issued to fund the account. If the request is made by a
school district, the school district must attach to the request a
copy of a resolution adopted by the district school board for the
district authorizing the request. The board shall adopt rules
governing offsets under the provisions of this subsection. - }
{ - (6) The board shall apply any excess amounts in an
account established under subsection (2) of this section to
offset contributions to the individual account program pursuant
to subsection (5) of this section only if the board has
determined that applying the excess amounts does not cause the
system or the Public Employees Retirement Fund to lose
qualification as a qualified governmental retirement plan and
trust under the Internal Revenue Code and under regulations
adopted pursuant to the Internal Revenue Code. - }
SECTION 5. ORS 238.660 is amended to read:
238.660. (1) The Public Employees Retirement Fund is declared
to be a trust fund, separate and distinct from the General Fund,
for the uses and purposes set forth in this chapter and ORS
chapter 238A and ORS 237.950 to 237.980, and for no other use or
purpose, except that this provision shall not be deemed to amend
or impair the force or effect of any law of this state
specifically authorizing the investment of moneys from the fund.
Interest earned by the fund shall be credited to the fund. Except
as otherwise specifically provided by law, the Public Employees
Retirement Board established by ORS 238.630 is declared to be the
trustee of the fund. Consistent with the legislative intent
expressed in ORS 238.601, and to the extent it is consistent with
the board's fiduciary duties, the board shall give equal
consideration to the interests of participating public employers
and the interests of members. Nothing in this subsection shall be
construed to impose a fiduciary duty on the board to consider the
interests of public employers, and the board shall consider the
interests of public employers only with respect to matters
unrelated to the board's fiduciary duties as trustee of the fund.
(2) Until all liabilities to members and their beneficiaries
are satisfied, assets of the fund may not be diverted or
otherwise put to any use that is not for the exclusive benefit of
members and their beneficiaries. This subsection does not limit
return of employer contributions for health benefits in the
manner provided by ORS 238.410, 238.415 and 238.420 upon
satisfaction of all liabilities for health benefits under those
sections.
(3) The State of Oregon and other public employers that make
contributions to the fund have no proprietary interest in the
fund or in the contributions made to the fund by them. The state
and other public employers disclaim any right to reclaim those
contributions and waive any right of reclamation they may have in
the fund. This subsection does not prohibit alteration or refund
of employer contributions if the alteration or refund is
authorized under this chapter or ORS chapter 238A and is due to
erroneous payment or decreased liability for employer
contributions under the system. { - This subsection does not
prohibit the offset of contributions to the individual account
program under ORS 238.229 (5). - }
(4) The board may accept gifts of money or other property from
any source, given for the uses and purposes of the system. Money
so received shall be paid into the fund. Money or other property
so received shall be used for the purposes for which received.
Unless otherwise prescribed by the source from which the money or
other property is received, the money shall be considered as
income of the fund and the other property shall be retained,
managed and disposed of as are investments of the fund.
(5) All moneys paid into the fund shall be deposited with the
State Treasurer, who shall be custodian of the fund and pay all
warrants drawn on it in compliance with law. No such warrant
shall be paid until the claim for which it is drawn is first
approved by the director or designee and otherwise audited and
verified as required by law. Monthly, each beneficiary's gross
benefit shall be calculated; applicable deductions made for
taxes, insurance and other withholdings; and the net amount paid
to the beneficiary, by check or by electronic funds transfer
(EFT) to the beneficiary's bank. A deduction summary shall be
made, by type, and a check issued for the aggregate of each type
for transmittal to the appropriate taxing jurisdiction, vendor or
institution. A voucher shall be prepared and transmitted to the
Oregon Department of Administrative Services for reimbursement of
the checking account, and the department shall draw a warrant on
the State Treasurer, payable to the Public Employees Retirement
System, for the amount thereof.
(6) Any warrant, check or order for the payment of benefits or
refunds under the system out of the fund issued by the board
which is canceled, declared void or otherwise made unpayable
pursuant to law because it is outstanding and unpaid for a period
of more than two years, may be reissued by the board without bond
if the payee is located after such warrant, check or order is
canceled, declared void or otherwise made unpayable pursuant to
law.
(7) All references in this chapter to checks or warrants are
subject to the provisions of ORS 291.001.
(8) The board shall provide for an annual audit of the
retirement fund and for an annual report to the Legislative
Assembly and to all members of, retirees of, and all employers
participating in, the system. The annual report must contain
financial statements prepared in accordance with generally
accepted accounting principles. The financial statements must
include the report of any independent auditor.
(9) The board may review legislative proposals for changes in
the benefits provided under this chapter and ORS chapter 238A and
may make recommendations to committees of the Legislative
Assembly on those proposed changes. In making recommendations
under this subsection, the board acts as a policy advisor to the
Legislative Assembly and not as a fiduciary. In making
recommendations under this subsection on the Oregon Public
Service Retirement Plan established by ORS chapter 238A, the
board shall seek to maintain the balance between benefits and
costs, and the relative risk borne by employers and employees
with respect to investment performance, reflected in ORS chapter
238A as in effect on January 1, 2004.
(10) The board shall appoint a committee to advise the board on
legislative proposals for changes in the benefits provided under
this chapter and ORS chapter 238A. The committee must have an
equal number of members representing labor and management. No
costs of reviewing legislative proposals and making
recommendations under this subsection may be charged to the fund.
Any member of the committee who is an active member of the system
shall be released by the participating public employer who
employs the member for the purpose of conducting the official
business of the committee, and the wages or salary of the member
may not be reduced by the employer during periods that the member
is released from duty for the purpose of conducting the official
business of the committee.
SECTION 6. ORS 238A.005, as amended by section 1, chapter 31,
Oregon Laws 2012, is amended to read:
238A.005. For the purposes of this chapter:
(1) 'Active member' means a member of the pension program or
the individual account program of the Oregon Public Service
Retirement Plan who is actively employed in a qualifying
position.
(2) 'Actuarial equivalent' means a payment or series of
payments having the same value as the payment or series of
payments replaced, computed on the basis of interest rate and
mortality assumptions adopted by the board.
(3) 'Board' means the Public Employees Retirement Board.
(4) 'Eligible employee' means a person who performs services
for a participating public employer, including elected officials
other than judges. 'Eligible employee' does not include:
(a) Persons engaged as independent contractors;
(b) Aliens working under a training or educational visa;
(c) Persons, other than workers in the Industries for the Blind
Program under ORS 346.190, provided sheltered employment or
make-work by a public employer;
(d) Persons categorized by a participating public employer as
student employees;
(e) Any person who is an inmate of a state institution;
(f) Employees of foreign trade offices of the Oregon Business
Development Department who live and perform services in foreign
countries under the provisions of ORS 285A.075 (1)(g);
(g) An employee actively participating in an alternative
retirement program established under ORS 353.250 or an optional
retirement plan established under ORS 341.551;
(h) Employees of the Oregon University System who are actively
participating in an optional retirement plan offered under ORS
243.800;
(i) Any employee who belongs to a class of employees that was
not eligible on August 28, 2003, for membership in the system
under the provisions of ORS chapter 238 or other law;
(j) Any person who belongs to a class of employees who are not
eligible to become members of the Oregon Public Service
Retirement Plan under the provisions of ORS 238A.070 (2);
(k) Any person who is retired under ORS 238A.100 to 238A.245 or
ORS chapter 238 and who continues to receive retirement benefits
while employed; and
(L) Judges.
(5) 'Firefighter' means:
(a) A person employed by a local government, as defined in ORS
174.116, whose primary job duties include the fighting of fires;
(b) The State Fire Marshal, the chief deputy state fire marshal
and deputy state fire marshals; and
(c) An employee of the State Forestry Department who is
certified by the State Forester as a professional wildland
firefighter and whose primary duties include the abatement of
uncontrolled fires as described in ORS 477.064.
(6) 'Fund' means the Public Employees Retirement Fund.
(7)(a) 'Hour of service' means:
(A) An hour for which an eligible employee is directly or
indirectly paid or entitled to payment by a participating public
employer for performance of duties in a qualifying position; and
(B) An hour of vacation, holiday, illness, incapacity, jury
duty, military duty or authorized leave during which an employee
does not perform duties but for which the employee is directly or
indirectly paid or entitled to payment by a participating public
employer for services in a qualifying position, as long as the
hour is within the number of hours regularly scheduled for the
performance of duties during the period of vacation, holiday,
illness, incapacity, jury duty, military duty or authorized
leave.
(b) 'Hour of service' does not include any hour for which
payment is made or due under a plan maintained solely for the
purpose of complying with applicable workers' compensation laws
or unemployment compensation laws.
(8) 'Inactive member' means a member of the pension program or
the individual account program of the Oregon Public Service
Retirement Plan whose membership has not been terminated, who is
not a retired member and who is not employed in a qualifying
position.
(9) 'Individual account program' means the defined contribution
individual account program of the Oregon Public Service
Retirement Plan established under ORS 238A.025.
(10) 'Institution of higher education' means a public
university listed in ORS 352.002, the Oregon Health and Science
University or a community college, as defined in ORS 341.005.
(11) 'Member' means an eligible employee who has established
membership in the pension program or the individual account
program of the Oregon Public Service Retirement Plan and whose
membership has not been terminated under ORS 238A.110 or
238A.310.
(12) 'Participating public employer' means a public employer as
defined in ORS 238.005 that provides retirement benefits for
employees of the public employer under the system.
(13) 'Pension program' means the defined benefit pension
program of the Oregon Public Service Retirement Plan established
under ORS 238A.025.
(14) 'Police officer' means a police officer as described in
ORS 238.005.
(15) 'Qualifying position' means one or more jobs with one or
more participating public employers in which an eligible employee
performs 600 or more hours of service in a calendar year,
excluding any service in a job for which benefits are not
provided under the Oregon Public Service Retirement Plan pursuant
to ORS 238A.070 (2).
(16) 'Retired member' means a pension program member who is
receiving a pension as provided in ORS 238A.180 to 238A.195.
(17)(a) 'Salary' means the remuneration paid to an active
member in return for services to the participating public
employer, including remuneration in the form of living quarters,
board or other items of value, to the extent the remuneration is
includable in the employee's taxable income under Oregon law.
Salary includes the additional amounts specified in paragraph (b)
of this subsection, but does not include the amounts specified in
paragraph (c) of this subsection, regardless of whether those
amounts are includable in taxable income.
(b) 'Salary' includes the following amounts:
(A) Payments of employee and employer money into a deferred
compensation plan that are made at the election of the employee.
(B) Contributions to a tax-sheltered or deferred annuity that
are made at the election of the employee.
(C) Any amount that is contributed to a cafeteria plan or
qualified transportation fringe benefit plan by the employer at
the election of the employee and that is not includable in the
taxable income of the employee by reason of 26 U.S.C. 125 or
132(f)(4), as in effect on December 31, 2011.
(D) Any amount that is contributed to a cash or deferred
arrangement by the employer at the election of the employee and
that is not included in the taxable income of the employee by
reason of 26 U.S.C. 402(e)(3), as in effect on December 31, 2011.
(E) Retroactive payments described in ORS 238.008.
{ - (F) The amount of an employee contribution to the
individual account program that is paid by the employer and
deducted from the compensation of the employee, as provided under
ORS 238A.335 (1) and (2)(a). - }
{ - (G) The amount of an employee contribution to the
individual account program that is not paid by the employer under
ORS 238A.335. - }
{ - (H) - } { + (F) + } Wages of a deceased member paid to
a surviving spouse or dependent children under ORS 652.190.
(c) 'Salary' does not include the following amounts:
(A) Travel or any other expenses incidental to employer's
business which is reimbursed by the employer.
(B) Payments made on account of an employee's death.
(C) Any lump sum payment for accumulated unused sick leave,
vacation leave or other paid leave.
(D) Any severance payment, accelerated payment of an employment
contract for a future period or advance against future wages.
(E) Any retirement incentive, retirement bonus or retirement
gratuitous payment.
(F) Payment for a leave of absence after the date the employer
and employee have agreed that no future services in a qualifying
position will be performed.
(G) Payments for instructional services rendered to public
universities of the Oregon University System or the Oregon Health
and Science University when those services are in excess of
full-time employment subject to this chapter. A person employed
under a contract for less than 12 months is subject to this
subparagraph only for the months covered by the contract.
{ - (H) The amount of an employee contribution to the
individual account program that is paid by the employer and is
not deducted from the compensation of the employee, as provided
under ORS 238A.335 (1) and (2)(b). - }
{ - (I) - } { + (H) + } Any amount in excess of $200,000
for a calendar year. If any period over which salary is
determined is less than 12 months, the $200,000 limitation for
that period shall be multiplied by a fraction, the numerator of
which is the number of months in the determination period and the
denominator of which is 12. The board shall adopt rules adjusting
this dollar limit to incorporate cost-of-living adjustments
authorized by the Internal Revenue Service.
(18) 'System' means the Public Employees Retirement System.
SECTION 7. ORS 238A.220 is amended to read:
238A.220. (1) { - A - } Participating public
{ - employer - } { + employers and active members + } shall
make { - employer - } contributions to the Public Employees
Retirement Board at intervals designated by the board in the
amounts determined by the board under ORS 238.225. All
participating public employers shall be considered to be a single
employer for the purposes of the employer contributions under ORS
238.225 that are required for funding the pension program
established under ORS 238A.025.
(2) For the purpose of the actuarial computation required under
ORS 238.225, the board shall separately establish the liability
of participating public employers for police officers and
firefighters under the pension program and shall require that
public employers that employ police officers and firefighters who
are members of the pension program make contributions for those
employees based on the liability established under this
subsection.
SECTION 8. ORS 238A.340 is amended to read:
238A.340. (1) A participating public employer may agree, by a
written employment policy or agreement, to make employer
contributions for members of the individual account program
employed by the employer. The percentage of salary paid as
employer contributions may not be less than one percent of salary
or more than six percent of salary, and must be a whole number. A
participating public employer may make an agreement under this
section for specific groups of employees employed by the public
employer.
(2) If a participating public employer makes employer
contributions under this section and the member for
{ - which - } { + whom + } the contributions are made fails to
vest in the employer account under the provisions of ORS
238A.320, the Public Employees Retirement Board shall apply the
contributions in the employer account against other obligations
of the employer under the Oregon Public Service Retirement Plan.
{ + (3) A participating public employer may not make employer
contributions under this section on or after the effective date
of this 2013 Act. + }
SECTION 9. { + The amendments to ORS 238.225, 238.229,
238.660, 238A.005, 238A.220, 238A.330, 238A.335 and 238A.340 by
sections 1 to 8 of this 2013 Act do not affect any collective
bargaining agreement entered into before the effective date of
this 2013 Act. + }
SECTION 10. { + (1) Jurisdiction is conferred on the Supreme
Court to determine in the manner provided by this section whether
this 2013 Act breaches any contract between members of the Public
Employees Retirement System and their employers or violates any
constitutional provision, including but not limited to impairment
of contract rights of members of the Public Employees Retirement
System under Article I, section 21, of the Oregon Constitution,
or Article I, section 10, clause 1, of the United States
Constitution.
(2) A person who is adversely affected by this 2013 Act or who
will be adversely affected by this 2013 Act may institute a
proceeding for review by filing with the Supreme Court a petition
that meets the following requirements:
(a) The petition must be filed within 60 days after the
effective date of this 2013 Act.
(b) The petition must include the following:
(A) A statement of the basis of the challenge; and
(B) A statement and supporting affidavit showing how the
petitioner is adversely affected.
(3) The petitioner shall serve a copy of the petition by
registered or certified mail upon the Public Employees Retirement
Board, the Attorney General and the Governor.
(4) Proceedings for review under this section shall be given
priority over all other matters before the Supreme Court.
(5) The Supreme Court shall allow public employers
participating in the Public Employees Retirement System to
intervene in any proceeding under this section.
(6) In the event the Supreme Court determines that there are
factual issues in the petition, the Supreme Court may appoint a
special master to hear evidence and to prepare recommended
findings of fact. + }
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