Senate Bill sb0002c1

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    Florida Senate - 2001                              CS for SB 2

    By the Committee on Governmental Oversight and Productivity;
    and Senators Burt, Smith and Lawson




    302-1810-01

  1                      A bill to be entitled

  2         An act relating to retirement; amending s.

  3         121.021, F.S.; redefining the term "average

  4         final compensation" with respect to the Florida

  5         Retirement System; revising contribution rates

  6         as part of the funding process; amending s.

  7         121.091, F.S.; providing for a repurchase of

  8         prior service credit for certain members of the

  9         Special Risk Class or Special Risk

10         Administrative Support Class of the Florida

11         Retirement System who retired or terminated

12         employment before July 1, 2000; providing for

13         actuarial funding of benefits; providing a

14         declaration of an important state interest;

15         providing an effective date.

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

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19         Section 1.  Subsection (24) of section 121.021, Florida

20  Statutes, is amended to read:

21         121.021  Definitions.--The following words and phrases

22  as used in this chapter have the respective meanings set forth

23  unless a different meaning is plainly required by the context:

24         (24)  "Average final compensation" means the average of

25  the 3 5 highest fiscal years of compensation for creditable

26  service prior to retirement, termination, or death.  For

27  in-line-of-duty disability benefits, if less than 3 5 years of

28  creditable service have been completed, the term "average

29  final compensation" means the average annual compensation of

30  the total number of years of creditable service.  Each year

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    Florida Senate - 2001                              CS for SB 2
    302-1810-01




  1  used in the calculation of average final compensation shall

  2  commence on July 1.

  3         (a)  The average final compensation shall include:

  4         1.  Accumulated annual leave payments, not to exceed

  5  500 hours; and

  6         2.  All payments defined as compensation in subsection

  7  (22).

  8         (b)  The average final compensation shall not include:

  9         1.  Compensation paid to professional persons for

10  special or particular services;

11         2.  Payments for accumulated sick leave made due to

12  retirement or termination;

13         3.  Payments for accumulated annual leave in excess of

14  500 hours;

15         4.  Bonuses as defined in subsection (47);

16         5.  Third party payments made on and after July 1,

17  1990; or

18         6.  Fringe benefits (for example, automobile allowances

19  or housing allowances).

20         Section 2.  Effective July 1, 2002, for the purposes of

21  funding the 3-year average final compensation benefit change,

22  the contribution rate for the below-named classes of the

23  Florida Retirement System shall be increased, as follows:

24         (a)  The contribution rate that applies to the Regular

25  Class of the Florida Retirement System shall be increased by

26  1.06 percentage points.

27         (b)  The contribution rate that applies to the Special

28  Risk Class of the Florida Retirement System shall be increased

29  by 2.14 percentage points.

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    Florida Senate - 2001                              CS for SB 2
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  1         (c)  The contribution rate that applies to the Special

  2  Risk Administrative Support Class of the Florida Retirement

  3  System shall be increased by 1.67 percentage points.

  4         (d)  The contribution rate that applies to the Judicial

  5  subclass of the Elected Officers' Class of the Florida

  6  Retirement System shall increase by 1.87 percentage points.

  7         (e)  The contribution rate that applies to the

  8  legislative-attorney-Cabinet subclass of the Elected Officers'

  9  Class of the Florida Retirement Class shall be increased by

10  1.79 percentage points.

11         (f)  The contribution rate that applies to the County

12  Officers' subclass of the Elected Officers' Class of the

13  Florida Retirement System shall be increased by 1.66

14  percentage points.

15         (g)  The contribution rate that applies to the Senior

16  Management Service Class of the Florida Retirement System

17  shall be increased by 1.45 percentage points.

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19  These increases shall be in addition to all changes to such

20  contribution rates which may be enacted into law to take

21  effect on that date. The Division of Statutory Revision is

22  directed to adjust the contribution rates set forth in

23  sections 122.052, 121.055, and 121.071, Florida Statutes.

24         Section 3.  Subsection (1) of section 121.091, Florida

25  Statutes, is amended to read:

26         121.091  Benefits payable under the system.--Benefits

27  may not be paid under this section unless the member has

28  terminated employment as provided in s. 121.021(39)(a) or

29  begun participation in the Deferred Retirement Option Program

30  as provided in subsection (13), and a proper application has

31  been filed in the manner prescribed by the department. The

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    Florida Senate - 2001                              CS for SB 2
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  1  department may cancel an application for retirement benefits

  2  when the member or beneficiary fails to timely provide the

  3  information and documents required by this chapter and the

  4  department's rules. The department shall adopt rules

  5  establishing procedures for application for retirement

  6  benefits and for the cancellation of such application when the

  7  required information or documents are not received.

  8         (1)  NORMAL RETIREMENT BENEFIT.--Upon attaining his or

  9  her normal retirement date, the member, upon application to

10  the administrator, shall receive a monthly benefit which shall

11  begin to accrue on the first day of the month of retirement

12  and be payable on the last day of that month and each month

13  thereafter during his or her lifetime. The normal retirement

14  benefit, including any past or additional retirement credit,

15  may not exceed 100 percent of the average final compensation.

16  The amount of monthly benefit shall be calculated as the

17  product of A and B, subject to the adjustment of C, if

18  applicable, as set forth below:

19         (a)1.  For creditable years of Regular Class service, A

20  is 1.60 percent of the member's average final compensation, up

21  to the member's normal retirement date. Upon completion of the

22  first year after the normal retirement date, A is 1.63 percent

23  of the member's average final compensation.  Following the

24  second year after the normal retirement date, A is 1.65

25  percent of the member's average final compensation. Following

26  the third year after the normal retirement date, and for

27  subsequent years, A is 1.68 percent of the member's average

28  final compensation.

29         2.  For creditable years of special risk service, A is:

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    Florida Senate - 2001                              CS for SB 2
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  1         a.  Two percent of the member's average final

  2  compensation for all creditable years prior to October 1,

  3  1974;

  4         b.  Three percent of the member's average final

  5  compensation for all creditable years after September 30,

  6  1974, and before October 1, 1978;

  7         c.  Two percent of the member's average final

  8  compensation for all creditable years after September 30,

  9  1978, and before January 1, 1989;

10         d.  Two and two-tenths percent of the member's final

11  monthly compensation for all creditable years after December

12  31, 1988, and before January 1, 1990;

13         e.  Two and four-tenths percent of the member's average

14  final compensation for all creditable years after December 31,

15  1989, and before January 1, 1991;

16         f.  Two and six-tenths percent of the member's average

17  final compensation for all creditable years after December 31,

18  1990, and before January 1, 1992;

19         g.  Two and eight-tenths percent of the member's

20  average final compensation for all creditable years after

21  December 31, 1991, and before January 1, 1993;

22         h.  Three percent of the member's average final

23  compensation for all creditable years after December 31, 1992;

24  and

25         i.  Three percent of the member's average final

26  compensation for all creditable years of service after

27  September 30, 1978, and before January 1, 1993, for any

28  special risk member who retires after July 1, 2000, or any

29  member of the Special Risk Administrative Support Class

30  entitled to retain the special risk normal retirement date who

31  was a member of the Special Risk Class during the time period

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    Florida Senate - 2001                              CS for SB 2
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  1  and who retires after July 1, 2000. The provisions of this

  2  sub-subparagraph shall extend also to those members with

  3  creditable service in these classes who have served between

  4  these dates and who have retired, are participants in the

  5  deferred retirement option program, or have terminated

  6  employment with vested rights before July 1, 2000.

  7         3.  For creditable years of Senior Management Service

  8  Class service after January 31, 1987, A is 2 percent;

  9         4.  For creditable years of Elected Officers' Class

10  service as a Supreme Court Justice, district court of appeal

11  judge, circuit judge, or county court judge, A is 3 1/3

12  percent of the member's average final compensation, and for

13  all other creditable service in such class, A is 3 percent of

14  average final compensation;

15         (b)  B is the number of the member's years and any

16  fractional part of a year of creditable service earned

17  subsequent to November 30, 1970; and

18         (c)  C is the normal retirement benefit credit brought

19  forward as of November 30, 1970, by a former member of an

20  existing system.  Such normal retirement benefit credit shall

21  be determined as the product of X and Y when X is the

22  percentage of average final compensation which the member

23  would have been eligible to receive if the member had attained

24  his or her normal retirement date as of November 30, 1970, all

25  in accordance with the existing system under which the member

26  is covered on November 30, 1970, and Y is average final

27  compensation as defined in s. 121.021(25).  However, any

28  member of an existing retirement system who is eligible to

29  retire and who does retire, become disabled, or die prior to

30  April 15, 1971, may have his or her retirement benefits

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    Florida Senate - 2001                              CS for SB 2
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  1  calculated on the basis of the best 5 of the last 10 years of

  2  service.

  3         (d)  A member's average final compensation shall be

  4  determined by formula to obtain the coverage for the 5 highest

  5  fiscal years' salaries, calculated as provided by rule.

  6         Section 4.  It is the intent of the Legislature that

  7  the costs attributable to increases in the repurchase of

  8  retirement accrual rates for retired and inactive members of

  9  the Special Risk Class from October 1978 through December 1992

10  shall be funded by recognition of a level lump sum of $740

11  million, amortized over 5 years in equal annual payments, from

12  the excess actuarial assets of the Florida Retirement System

13  Trust Fund. If, after recognition of the excess actuarial

14  assets, there remains an unfunded actuarial liability

15  attributable to the increase in the retirement accrual rates,

16  the payroll contribution rate for the Special Risk Class shall

17  be increased by .60 percentage points, effective July 1, 2001,

18  unless the Legislature provides an alternative funding

19  mechanism.

20         Section 5.  The Legislature finds that a proper and

21  legitimate state purpose is served when employees and retirees

22  of the state and its political subdivisions and the

23  dependents, survivors, and beneficiaries of such employees and

24  retirees are extended the basic protections afforded by

25  governmental retirement systems that provide fair and adequate

26  benefits and that are managed, administered, and funded in an

27  actuarially sound manner, as required by Section 14, Article

28  X, of the State Constitution and part VII of chapter 112,

29  Florida Statutes. Therefore, the Legislature determines and

30  declares that this act fulfills an important state interest.

31         Section 6.  This act shall take effect July 1, 2001.

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    Florida Senate - 2001                              CS for SB 2
    302-1810-01




  1          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
  2                               SB 2

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  4  The Committee Substitute provides employer payroll
    contribution rate increases for funding of the three-year
  5  average final compensation benefit increase and adds the
    provisions of SB 234 to the bill. SB 234 in its amended form
  6  retroactively repurchases retirement credit for retired
    members of the Special Risk Class of the Florida Retirement
  7  System for a period of service when that credit was valued at
    a reduced rate. The repurchase is itself funded from available
  8  retirement surplus funds or, if insufficient, a payroll cost
    increase of .60 percentage points.
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