Senate Bill 1434

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    Florida Senate - 2000                                  SB 1434

    By the Committee on Governmental Oversight and Productivity





    302-206-00

  1                      A bill to be entitled

  2         An act relating to public employees; creating

  3         s. 110.1315, F.S.; requiring that the

  4         Department of Management Services contract with

  5         a private vendor for an alternative retirement

  6         program for temporary and seasonal state

  7         employees; providing contract requirements;

  8         requiring the private vendor to indemnify the

  9         state and participating employees from certain

10         adverse tax consequences; creating s. 110.1316,

11         F.S.; providing for favorable tax treatment for

12         certain incentive pay and payments for

13         accumulated sick leave and annual leave;

14         providing for the use of unobligated payroll

15         contributions by state agencies; providing for

16         oversight of the program; providing an

17         effective date.

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19  Be It Enacted by the Legislature of the State of Florida:

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21         Section 1.  Section 110.1315, Florida Statutes, is

22  created to read:

23         110.1315  Alternative benefits; other-personal-services

24  employees.--

25         (1)  The Department of Management Services shall

26  contract by October 1, 2000, for the implementation by March

27  1, 2001, of an alternative retirement income security program

28  for eligible part-time and seasonal employees of the state

29  which is funded from appropriations for other personal

30  services. The contract must provide for a private vendor to

31  administer the program, and the program must provide

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    Florida Senate - 2000                                  SB 1434
    302-206-00




  1  retirement benefits as required under s. 3121(b)(7)(F) of the

  2  Internal Revenue Code. The department shall develop a request

  3  for proposals and solicit qualified vendors to compete for the

  4  award of the contract. The proposal must have received all

  5  necessary federal and state approval as required by law and

  6  must comply with s. 112.65.

  7         (2)  The vendor shall provide and administer this

  8  defined-contribution program under the provisions of s.

  9  3121(b)(7)(F) of the Internal Revenue Code. The program must

10  provide that there will be no risk of the principal to the

11  participants, that there will be a reasonable rate of interest

12  as defined in the Treasury Regulations for s. 3121(b)(7)(F) of

13  the Internal Revenue Code, that there will be no withdrawal or

14  surrender penalties or fees of any nature charged to the

15  participants, that there will be no administrative charges to

16  either the participants or the state, and that there will be

17  immediate 100-percent vesting to the participants. The program

18  must be a qualified plan under s. 457 of the Internal Revenue

19  Code which is separate from any other plan under that section.

20  The vendor must indemnify the state, its agencies, and

21  participating employees for any damages resulting from a

22  finding by the Internal Revenue Service that the plan is in

23  violation of s. 3121(b)(7)(F) of the Internal Revenue Code.

24         Section 2.  Section 110.1316, Florida Statutes, is

25  created to read:

26         110.1316  Alternative benefits; tax-sheltered incentive

27  pay and annual-leave and sick-leave payments.--The Department

28  of Management Services shall contract by October 1, 2000, for

29  the implementation by March 1, 2001, of a tax-sheltered plan

30  for state employees who are eligible for incentive pay or for

31  payment for accumulated sick leave or annual leave at

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    Florida Senate - 2000                                  SB 1434
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  1  termination of employment or as a result of electing the

  2  Deferred Retirement Option Plan (DROP). The contract must

  3  provide for a private vendor to administer the plan, and the

  4  plan must provide retirement benefits in a manner that

  5  minimizes the tax liability of the participants. The plan must

  6  be funded by employer contributions of incentive pay or

  7  payments for accumulated sick leave or annual leave. Eligible

  8  employer contributions must be placed into the plan

  9  mandatorily in order to give the employer and the employee the

10  full advantages available under the federal tax laws. The plan

11  must have received all necessary federal and state approval as

12  required by law and must comply with s. 112.65. The proposal

13  may require that the vendor provide market risk or volatility

14  ratings from recognized rating agencies for each of its

15  investment products. The department shall provide for a system

16  of continuous quality-assurance oversight to ensure that the

17  plan objectives are achieved and that the plan is prudently

18  managed.

19         Section 3.  Unobligated employer payroll contributions

20  under this act must be placed in a mandatory reserve and be

21  transferred to administered funds pursuant to section 216.177,

22  Florida Statutes. Pursuant to budget amendments and the

23  legislative-consultation provisions of section 216.177,

24  Florida Statutes, the Executive Office of the Governor shall

25  release such funds only to agencies that are operating under a

26  performance-based budget approved under section 216.0166,

27  Florida Statutes, and that have achieved or exceeded their

28  approved performance expectations, as authorized by law. The

29  Legislature shall annually determine the maximum amount to be

30  placed in reserve under this section.

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    Florida Senate - 2000                                  SB 1434
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  1         Section 4.  The Department of Management Services shall

  2  assure that any provider company maintains an internal system

  3  of quality assurance, employs a proven functional system that

  4  is fully date-calculation compliant, and is subject to

  5  due-diligence inquiry concerning its ability to undertake its

  6  service responsibilities.

  7         Section 5.  This act shall take effect July 1, 2000.

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10                          SENATE SUMMARY

11    Requires that the Department of Management Services
      develop a request for proposals and contract with a
12    private vendor for an alternative retirement program for
      part-time and seasonal state employees. Provides for
13    100-percent vesting to the participants. Requires that
      the private vendor indemnify the state, its agencies, and
14    participating employees from adverse tax consequences if
      the program violates federal law. Requires that the
15    Department of Management Services contract with a private
      vendor to administer a tax-sheltered plan for state
16    employees which is funded by employer contributions of
      incentive pay or accumulated sick leave or annual leave.
17    Provides for payroll contributions under the act to be
      released only to agencies that operate under a
18    performance-based budget and that achieve performance
      expectations. (See bill for details.)
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