HOUSE BILL No. 5835 April 9, 2002, Introduced by Reps. Schauer, Frank, Neumann, Adamini, Rich Brown, Vear, Bisbee, Thomas and Spade and referred to the Committee on Senior Health, Security and Retirement. A bill to amend 1943 PA 240, entitled "State employees' retirement act," by amending sections 13 and 46 (MCL 38.13 and 38.46), section 13 as amended by 1996 PA 487, and by adding section 19g. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 13. (1) Except as otherwise provided in this act, mem- 2 bership in the retirement system consists of state employees 3 occupying permanent positions in the state civil service. All 4 state employees except those specifically excluded by law and 5 those who are members or eligible to be members of other statu- 6 tory retirement systems in this state, shall become members of 7 the retirement system. The employees may use service previously 8 performed as an employee of this state in meeting the service 9 requirements for the retirement allowances and death benefits 10 provided by the retirement system. However, the prior service 06057'01 MRM 2 1 shall not be used in computing the amount of a retirement 2 allowance to be paid by the retirement system unless the employee 3 pays to the retirement system the amount the employee's contribu- 4 tions would have been had the employee become a member immedi- 5 ately upon employment by the state with interest compounded annu- 6 ally at the regular rate from a date 1 year after the date of 7 employment by this state to the date of payment. A person who 8 draws compensation as a state employee of a political subdivision 9 of this state is eligible for the benefits provided by this act 10 to the extent of the person's compensation paid by this state. 11 An individual who meets the requirements of section 44a is a 12 member of the retirement system. 13 (2) Elected or appointed state officials may elect not to 14 become or continue as members of the retirement system by filing 15 written notice with the retirement board. An appointed state 16 official who is a member of a state board, commission, or council 17 and who receives a per diem rate in his or her capacity as a 18 member of the board, commission, or council is excluded from mem- 19 bership in the retirement system for the service rendered in his 20 or her capacity as a member of the board, commission, or 21 council. Service performed by an elected or appointed official 22 during the time the official elects not to participate shall not 23 be used in meeting the service requirement or in computing the 24 amount of retirement allowance to be paid by the retirement 25 system. A member who elects not to participate shall be refunded 26 all contributions made before the election. 06057'01 3 1 (3) Membership in the retirement system does not include any 2 of the following: 3 (a) A person who is a contributing member in the public 4 school employees' retirement system provided for in the public 5 school employees retirement act of 1979,Act No. 300 of the6Public Acts of 1980, being sections 38.1301 to 38.1408 of the7Michigan Compiled Laws1980 PA 300, MCL 38.1301 TO 38.1408. 8 (b) A person who is a contributing member in the Michigan 9 judges retirement system provided for in the judges retirement 10 act of 1992,Act No. 234 of the Public Acts of 1992, being sec-11tions 38.2101 to 38.2608 of the Michigan Compiled Laws1992 12 PA 234, MCL 38.2101 TO 38.2670. 13 (c) A person who comes within the Michigan state police 14 retirement system provided for in the state police retirement act 15 of 1986,Act No. 182 of the Public Acts of 1986, being sections1638.1601 to 38.1648 of the Michigan Compiled Laws1986 PA 182, 17 MCL 38.1601 TO 38.1648. 18 (d) An individual who is first employed and entered upon the 19 payroll on or after March 31, 1997 for employment for which the 20 individual would have been eligible for membership under this 21 section before March 31, 1997. An individual described in this 22 subdivision is eligible to be a qualified participant in Tier 2 23 subject to sections 50 to 69. 24 (e)AnEXCEPT AS PROVIDED IN SECTION 19G, AN individual 25 who elects to terminate membership under section 50 and who, but 26 for that election, would otherwise be eligible for membership in 27 Tier 1 under this section. 06057'01 4 1 (4) A person who is hired in state classified or 2 unclassified service after June 30, 1974, who is first employed 3 and entered upon the payroll before March 31, 1997, and who pos- 4 sesses a Michigan teaching certificate shall be a member of this 5 retirement system. After June 30, 1974, but before March 31, 6 1997, a person who returns to state employment in the classified 7 or unclassified service who previously was a contributing member 8 of the Michigan public school employees' retirement system shall 9 have the person's accumulated contributions and service trans- 10 ferred to this retirement system, or having withdrawn the contri- 11 butions, may pay into the retirement system the amount withdrawn 12 together with regular interest and have credit restored as pro- 13 vided for in section 16. On and after March 31, 1997, an indi- 14 vidual described in this subsection who returns to state service 15 shall make an irrevocable election to remain in Tier 1 or to 16 become a qualified participant of Tier 2 in the manner prescribed 17 in section 50. 18 (5) A person, not regularly employed by this state, who is 19 employed through participation in 1 or more of the following pro- 20 grams, shall not be a member of the retirement system and shall 21 not receive service credit for the employment: 22 (a) A program authorized, undertaken, and financed pursuant 23 to the comprehensive employment and training act of 1973, former 24 Public Law 93-203, 87 Stat. 839. 25 (b) A summer youth employment program established pursuant 26 to the Michigan youth corps act,Act No. 69 of the Public Acts06057'01 5 1of 1983, being sections 409.221 to 409.229 of the Michigan2Compiled Laws1983 PA 69, MCL 409.221 TO 409.229. 3 (c) A program established pursuant to the job training part- 4 nership act, Public Law 97-300, 96 Stat. 1322. 5 (d) A program established pursuant to the Michigan opportu- 6 nity and skills training program, first established under sec- 7 tions 12 to 23 of Act No. 259 of the Public Acts of 1983. 8 (e) A program established pursuant to the Michigan community 9 service corps program, first established under sections 25 to 35 10 of Act No. 259 of the Public Acts of 1983. 11 (6) A person, not regularly employed by this state, who is 12 employed to administer a program described in subsection (5) 13 shall not be a member of the retirement system and shall not 14 receive service credit for the employment. 15 (7) If a person described in subsection (5)(a) later becomes 16 a member of this retirement system within 12 months after the 17 date of termination as a participant in a transitional public 18 employment program, service credit shall be given for employment 19 which is excluded in subsection (5) for purposes of determining a 20 retirement allowance upon the payment by the person's employer 21 under subsection (5) from funds provided under the comprehensive 22 employment and training act of 1973, former Public Law 93-203, 23 87 Stat. 839, as funds permit, to the retirement system of the 24 contributions, plus regular interest, the employer would have 25 paid had the employment been rendered in a position covered by 26 this act. During the person's employment in the transitional 27 public employment program, the person's employer shall place in 06057'01 6 1 reserve a reasonable but not necessarily an actuarially 2 determined amount equal to the contributions that the employer 3 would have paid to the retirement system for those employees in 4 the transitional public employment program as if they were mem- 5 bers under this act, but only for that number of employees that 6 the employer determined would move from the transitional public 7 employment program into positions covered by this act. If the 8 funds provided under the comprehensive employment and training 9 act of 1973, former Public Law 93-203, 87 Stat. 839, are insuffi- 10 cient, the remainder of the employer contributions shall be paid 11 by the person's current employer. 12 SEC. 19G. (1) NOTWITHSTANDING SECTION 19, A MEMBER MAY 13 RETIRE AND RECEIVE A RETIREMENT ALLOWANCE COMPUTED UNDER THIS 14 SECTION IF THE MEMBER MEETS ALL OF THE FOLLOWING REQUIREMENTS: 15 (A) ON OR BEFORE NOVEMBER 1, 2002, OR ON THE EFFECTIVE DATE 16 OF HIS OR HER RETIREMENT, WHICHEVER IS EARLIER, THE MEMBER MEETS 17 1 OR MORE OF THE FOLLOWING: 18 (i) THE MEMBER'S COMBINED AGE AND LENGTH OF CREDITED SERVICE 19 IS EQUAL TO OR GREATER THAN 80 YEARS. 20 (ii) THE MEMBER IS 60 YEARS OF AGE OR OLDER AND HAS 10 OR 21 MORE YEARS OF CREDITED SERVICE. 22 (B) THE MEMBER IS WITHIN THE CLASSIFIED STATE CIVIL SERVICE, 23 IS AN EMPLOYEE OF THE JUDICIAL BRANCH, OR IS AN INDIVIDUAL NOT 24 DESCRIBED IN SUBSECTION (2)(B). 25 (C) THE MEMBER WAS EMPLOYED BY THIS STATE FOR THE 6-MONTH 26 PERIOD ENDING ON THE EFFECTIVE DATE OF HIS OR HER RETIREMENT OR 27 WAS AN EMPLOYEE OF THE STATE JUDICIAL COUNCIL ON SEPTEMBER 30, 06057'01 7 1 1996 AS DESCRIBED IN SECTION 44A. A MEMBER WHO IS ON LAYOFF 2 STATUS FROM STATE EMPLOYMENT IS CONSIDERED TO HAVE MET THE 3 EMPLOYMENT REQUIREMENT OF THIS SUBDIVISION. 4 (D) EXCEPT AS MAY BE PROVIDED OTHERWISE IN SUBSECTION (5), 5 THE MEMBER EXECUTES AND FILES A WRITTEN APPLICATION WITH THE 6 RETIREMENT BOARD, ON OR AFTER APRIL 1, 2002, BUT NOT LATER THAN 7 APRIL 30, 2002, STATING A DATE ON OR AFTER JULY 1, 2002, BUT NOT 8 LATER THAN NOVEMBER 1, 2002, ON WHICH HE OR SHE DESIRES TO 9 RETIRE. A MEMBER MAY WITHDRAW A WRITTEN APPLICATION ON OR BEFORE 10 MAY 15, 2002. A WRITTEN APPLICATION SUBMITTED BY A MEMBER AND 11 NOT WITHDRAWN ON OR BEFORE MAY 15, 2002 IS IRREVOCABLE. 12 (E) THE MEMBER IS NOT A CONSERVATION OFFICER AS DESCRIBED IN 13 SECTION 48. 14 (2) NOTWITHSTANDING SECTION 19, A MEMBER MAY RETIRE AND 15 RECEIVE A RETIREMENT ALLOWANCE COMPUTED UNDER THIS SECTION IF THE 16 MEMBER MEETS ALL OF THE FOLLOWING REQUIREMENTS: 17 (A) ON OR BEFORE NOVEMBER 1, 2002, OR ON THE EFFECTIVE DATE 18 OF HIS OR HER RETIREMENT, WHICHEVER IS EARLIER, THE MEMBER'S COM- 19 BINED AGE AND LENGTH OF CREDITED SERVICE IS EQUAL TO OR GREATER 20 THAN 80 YEARS OR THE MEMBER IS 60 YEARS OF AGE OR OLDER AND HAS 21 10 OR MORE YEARS OF CREDITED SERVICE. 22 (B) THE MEMBER IS AN EMPLOYEE OF THE LEGISLATURE, IS AN 23 EMPLOYEE OF THE OFFICE OF GOVERNOR, OR IS AN UNCLASSIFIED 24 EMPLOYEE WITHIN THE STATE CIVIL SERVICE. 25 (C) THE MEMBER WAS EMPLOYED BY THIS STATE OR THE LEGISLATURE 26 FOR THE 6-MONTH PERIOD ENDING ON THE EFFECTIVE DATE OF HIS OR HER 27 RETIREMENT. A MEMBER WHO IS ON LAYOFF STATUS FROM STATE 06057'01 8 1 EMPLOYMENT IS CONSIDERED TO HAVE MET THE EMPLOYMENT REQUIREMENT 2 OF THIS SUBDIVISION. 3 (D) THE MEMBER EXECUTES AND FILES A WRITTEN APPLICATION WITH 4 THE RETIREMENT BOARD, ON OR AFTER APRIL 1, 2002, BUT NOT LATER 5 THAN APRIL 30, 2002, STATING A DATE ON OR AFTER JULY 1, 2002, BUT 6 NOT LATER THAN NOVEMBER 1, 2002, ON WHICH HE OR SHE DESIRES TO 7 RETIRE. A MEMBER MAY WITHDRAW A WRITTEN APPLICATION ON OR BEFORE 8 MAY 15, 2002. A WRITTEN APPLICATION SUBMITTED BY A MEMBER AND 9 NOT WITHDRAWN ON OR BEFORE MAY 15, 2002 IS IRREVOCABLE. THIS 10 SUBDIVISION IS SUBJECT TO SUBSECTION (5). 11 (E) THE MEMBER IS NOT A CONSERVATION OFFICER AS DESCRIBED IN 12 SECTION 48. 13 (3) ANY AMOUNT THAT A MEMBER RETIRING UNDER THIS SECTION 14 WOULD OTHERWISE BE ENTITLED TO RECEIVE IN A LUMP SUM AT RETIRE- 15 MENT ON ACCOUNT OF ACCUMULATED SICK LEAVE SHALL BE PAID IN 60 16 CONSECUTIVE EQUAL MONTHLY INSTALLMENTS BEGINNING ON OR AFTER 17 OCTOBER 1, 2002. PAYMENTS RECEIVED UNDER THIS SUBSECTION MAY NOT 18 BE USED TO PURCHASE SERVICE CREDIT UNDER THIS ACT. THESE PAY- 19 MENTS FOR ACCUMULATED SICK LEAVE ARE TO BE PAID FROM FUNDS APPRO- 20 PRIATED TO THE APPOINTING AUTHORITY AND NOT FROM FUNDS OF THE 21 RETIREMENT SYSTEM. THESE PAYMENTS SHALL BE CONSIDERED TAXABLE 22 INCOME UNDER THE INCOME TAX ACT OF 1967, 1967 PA 281, MCL 206.1 23 TO 206.532. 24 (4) ANY AMOUNT THAT A MEMBER RETIRING UNDER THIS SECTION IS 25 ENTITLED TO RECEIVE IN A LUMP SUM AT RETIREMENT ON ACCOUNT OF 26 ACCUMULATED ANNUAL LEAVE SHALL BE PAID ON OR AFTER OCTOBER 1, 27 2002. 06057'01 9 1 (5) THE DIRECTOR OF A PRINCIPAL DEPARTMENT MAY REQUEST THAT 2 THE EFFECTIVE DATE OF RETIREMENT UNDER SUBSECTION (1) OF A MEMBER 3 EMPLOYED BY THAT DEPARTMENT BE EXTENDED TO A DATE NOT LATER THAN 4 FEBRUARY 1, 2004. TO MAKE A REQUEST UNDER THIS SUBSECTION, THE 5 DIRECTOR SHALL SUBMIT A WRITTEN REQUEST AND THE WRITTEN CONCUR- 6 RENCE OF THE MEMBER TO THE OFFICE OF THE STATE EMPLOYER AND THE 7 STATE BUDGET OFFICE ON OR BEFORE MAY 31, 2002. UPON RECEIPT OF 8 THE WRITTEN REQUEST AND CONCURRENCE, THE OFFICE OF THE STATE 9 EMPLOYER AND THE STATE BUDGET OFFICE MAY EXTEND THE EFFECTIVE 10 DATE OF RETIREMENT OF A MEMBER OTHERWISE ELIGIBLE TO RETIRE UNDER 11 SUBSECTION (1) TO A DATE NOT LATER THAN FEBRUARY 1, 2004. UPON 12 WRITTEN APPROVAL OF THE SENATE MAJORITY LEADER FOR A MEMBER WHO 13 IS AN EMPLOYEE OF THE SENATE, THE SPEAKER OF THE HOUSE OF REPRE- 14 SENTATIVES FOR A MEMBER WHO IS AN EMPLOYEE OF THE HOUSE OF REPRE- 15 SENTATIVES, THE SENATE MAJORITY LEADER AND THE SPEAKER OF THE 16 HOUSE OF REPRESENTATIVES FOR A MEMBER WHO IS AN EMPLOYEE OF THE 17 OFFICE OF THE AUDITOR GENERAL, OR THE CHAIR AND ALTERNATE CHAIR 18 OF THE LEGISLATIVE COUNCIL FOR A MEMBER WHO IS AN EMPLOYEE OF AN 19 AGENCY UNDER THE JURISDICTION OF THE LEGISLATIVE COUNCIL, AND 20 UPON WRITTEN CONCURRENCE OF THE MEMBER, THE EFFECTIVE DATE OF 21 RETIREMENT FOR THAT MEMBER UNDER SUBSECTION (2) MAY BE EXTENDED 22 TO A DATE NOT LATER THAN FEBRUARY 1, 2004. UPON WRITTEN APPROVAL 23 OF THE CHIEF JUSTICE FOR A MEMBER WHO IS AN EMPLOYEE OF THE JUDI- 24 CIAL BRANCH, INCLUDING, BUT NOT LIMITED TO, MEMBERS DESCRIBED IN 25 SECTION 44A, AND UPON WRITTEN CONCURRENCE OF THE MEMBER, THE 26 EFFECTIVE DATE OF RETIREMENT FOR THAT MEMBER UNDER SUBSECTION (1) 27 MAY BE EXTENDED TO A DATE NOT LATER THAN FEBRUARY 1, 2004. THE 06057'01 10 1 INDIVIDUAL OR INDIVIDUALS WHO APPROVE THE EXTENSION OF AN 2 EFFECTIVE DATE OF RETIREMENT FOR A MEMBER WHO IS AN EMPLOYEE OF 3 THE LEGISLATURE, SUPREME COURT, OR COURT OF APPEALS SHALL SUBMIT 4 WRITTEN NOTIFICATION TO THE OFFICE OF RETIREMENT SERVICES OF ALL 5 EXTENSIONS APPROVED ON OR BEFORE MAY 31, 2002. 6 (6) UPON HIS OR HER RETIREMENT AS PROVIDED IN THIS SECTION, 7 A MEMBER WHO DID NOT MAKE AN ELECTION UNDER SECTION 50 TO TERMI- 8 NATE MEMBERSHIP IN TIER 1 AND BECOME A QUALIFIED PARTICIPANT IN 9 TIER 2 SHALL RECEIVE A RETIREMENT ALLOWANCE EQUAL TO THE MEMBER'S 10 NUMBER OF YEARS AND FRACTION OF A YEAR OF CREDITED SERVICE MULTI- 11 PLIED BY 1-3/4% OF HIS OR HER FINAL AVERAGE COMPENSATION. EXCEPT 12 FOR THE CALCULATION PROVIDED IN THIS SUBSECTION, THE MEMBER'S 13 RETIREMENT ALLOWANCE IS SUBJECT TO SECTION 20. THE MEMBER'S 14 RETIREMENT ALLOWANCE IS NOT SUBJECT TO REDUCTION PURSUANT TO 15 SECTION 19(2). 16 (7) UPON HIS OR HER RETIREMENT AS PROVIDED IN THIS SECTION, 17 A FORMER MEMBER WHO MADE AN ELECTION UNDER SECTION 50 TO TERMI- 18 NATE MEMBERSHIP IN TIER 1 AND BECOME A QUALIFIED PARTICIPANT IN 19 TIER 2 SHALL RECEIVE A RETIREMENT ALLOWANCE EQUAL TO THE MEMBER'S 20 NUMBER OF YEARS AND FRACTION OF A YEAR OF CREDITED SERVICE MULTI- 21 PLIED BY 1/4% OF HIS OR HER FINAL AVERAGE COMPENSATION. EXCEPT 22 FOR THE CALCULATION PROVIDED IN THIS SUBSECTION, THE FORMER 23 MEMBER'S RETIREMENT ALLOWANCE IS SUBJECT TO SECTION 20. THE 24 FORMER MEMBER'S RETIREMENT ALLOWANCE IS NOT SUBJECT TO REDUCTION 25 PURSUANT TO SECTION 19(2). 26 (8) FOR PURPOSES OF THIS SECTION, AN INDIVIDUAL WHO ELECTED 27 TO TERMINATE MEMBERSHIP UNDER SECTION 50 AND WHO, BUT FOR THAT 06057'01 11 1 ELECTION, WOULD OTHERWISE BE ELIGIBLE FOR MEMBERSHIP IN TIER 1 2 UNDER SECTION 13, SHALL BE CONSIDERED A MEMBER OF TIER 1 FOR THE 3 LIMITED PURPOSE OF RECEIVING A RETIREMENT ALLOWANCE CALCULATED 4 UNDER THIS SECTION AND PAID BY THE RETIREMENT SYSTEM. 5 Sec. 46. (1) A supplemental member may retire with a sup- 6 plemental early retirement allowance provided in section 47 upon 7 satisfaction of each of the following conditions: 8 (a) He OR SHE is age 51 years or older but less than age 62 9 years. 10 (b) He OR SHE has 25 or more years of covered service. 11 (c) His OR HER last 3 years of credited service are covered 12 service. 13 (d) He OR SHE files a written request for retirement with 14 the retirement board stating the date that he OR SHE wishes to be 15 retired., which shall not be less than 30 days or more than 9016days after the date his application is filed.17 (2) A supplemental member may be separated from employment 18 in a covered position the first day of the calendar month follow- 19 ing the month in which he OR SHE attains age 56 years. A supple- 20 mental membersoseparated UNDER THIS SUBSECTION may retire 21 with a supplemental early retirement allowance provided in sec- 22 tion 47 if he OR SHE satisfies each of the following conditions: 23 (a) He OR SHE has not attained age 62 years. 24 (b) He OR SHE has 10 or more years of covered service. 25 (c) His OR HER last 3 years of credited service are covered 26 service. 06057'01 12 1 (d) He OR SHE files a written request for retirement with 2 the retirement board stating the date that he OR SHE wishes to be 3 retired., which shall not be less than 30 days or more than 904days after the date his application is filed.5 (3) The state personnel director shall determine all ques- 6 tions on eligibility for supplemental early retirement benefits 7 within the meaning of sections 45 to 47. 8 (4) A SUPPLEMENTAL MEMBER WHO IS ELIGIBLE TO RETIRE UNDER 9 THIS SECTION AND RECEIVE A SUPPLEMENTAL RETIREMENT ALLOWANCE AS 10 CALCULATED UNDER SECTION 47 MAY ALSO ELECT TO RETIRE AND RECEIVE 11 A RETIREMENT ALLOWANCE UNDER SECTION 19G IF THE SUPPLEMENTAL 12 MEMBER EXECUTES AND FILES A WRITTEN APPLICATION WITH THE RETIRE- 13 MENT BOARD, ON OR AFTER APRIL 1, 2002, BUT NOT LATER THAN APRIL 14 30, 2002, STATING A DATE ON OR AFTER JULY 1, 2002, BUT NOT LATER 15 THAN NOVEMBER 1, 2002, ON WHICH HE OR SHE DESIRES TO RETIRE. A 16 SUPPLEMENTAL MEMBER MAY WITHDRAW A WRITTEN APPLICATION ON OR 17 BEFORE MAY 15, 2002. A WRITTEN APPLICATION SUBMITTED BY A MEMBER 18 AND NOT WITHDRAWN ON OR BEFORE MAY 15, 2002 IS IRREVOCABLE. THE 19 SUPPLEMENTAL MEMBER WHO IS ENTITLED TO A RETIREMENT ALLOWANCE 20 CALCULATED UNDER SECTION 19G SHALL NOT RECEIVE THE RETIREMENT 21 ALLOWANCE CALCULATED UNDER SECTION 19G UNTIL THE SUPPLEMENTAL 22 MEMBER HAS ATTAINED 62 YEARS OF AGE. 06057'01 Final page. MRM