HB 0083 2003
1	CHAMBER ACTION
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6	The Committee on State Administration recommends the following:
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8	Committee Substitute
9	Remove the entire bill and insert:
10	A bill to be entitled
11	An act relating to the Florida Retirement System; amending
12	s. 121.091, F.S.; increasing the period of time in which
13	certain members of the system who are employed as
14	instructional personnel in grades K-12 may participate in
15	the DROP; providing a time period for certain retired
16	members to participate in the DROP; providing an effective
17	date.
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19	Be It Enacted by the Legislature of the State of Florida:
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21	Section 1. Subsection (13) of section 121.091, Florida
22	Statutes, is amended to read:
23	121.091 Benefits payable under the system.--Benefits may
24	not be paid under this section unless the member has terminated
25	employment as provided in s. 121.021(39)(a) or begun
26	participation in the Deferred Retirement Option Program as
27	provided in subsection (13), and a proper application has been
28	filed in the manner prescribed by the department. The department
29	may cancel an application for retirement benefits when the
30	member or beneficiary fails to timely provide the information
31	and documents required by this chapter and the department's
32	rules. The department shall adopt rules establishing procedures
33	for application for retirement benefits and for the cancellation
34	of such application when the required information or documents
35	are not received.
36	(13) DEFERRED RETIREMENT OPTION PROGRAM.--In general, and
37	subject to the provisions of this section, the Deferred
38	Retirement Option Program, hereinafter referred to as the DROP,
39	is a program under which an eligible member of the Florida
40	Retirement System may elect to participate, deferring receipt of
41	retirement benefits while continuing employment with his or her
42	Florida Retirement System employer. The deferred monthly
43	benefits shall accrue in the System Trust Fund on behalf of the
44	participant, plus interest compounded monthly, for the specified
45	period of the DROP participation, as provided in paragraph (c).
46	Upon termination of employment, the participant shall receive
47	the total DROP benefits and begin to receive the previously
48	determined normal retirement benefits. Participation in the DROP
49	does not guarantee employment for the specified period of DROP.
50	(a) Eligibility of member to participate in the DROP.--All
51	active Florida Retirement System members in a regularly
52	established position, and all active members of either the
53	Teachers' Retirement System established in chapter 238 or the
54	State and County Officers' and Employees' Retirement System
55	established in chapter 122 which systems are consolidated within
56	the Florida Retirement System under s. 121.011, are eligible to
57	elect participation in the DROP provided that:
58	1. The member is not a renewed member of the Florida
59	Retirement System under s. 121.122, or a member of the State
60	Community College System Optional Retirement Program under s.
61	121.051, the Senior Management Service Optional Annuity Program
62	under s. 121.055, or the optional retirement program for the
63	State University System under s. 121.35.
64	2. Except as provided in subparagraph 6., election to
65	participate is made within 12 months immediately following the
66	date on which the member first reaches normal retirement date,
67	or, for a member who reaches normal retirement date based on
68	service before he or she reaches age 62, or age 55 for Special
69	Risk Class members, election to participate may be deferred to
70	the 12 months immediately following the date the member attains
71	57, or age 52 for Special Risk Class members. For a member who
72	first reached normal retirement date or the deferred eligibility
73	date described above prior to the effective date of this
74	section, election to participate shall be made within 12 months
75	after the effective date of this section. A member who fails to
76	make an election within such 12-month limitation period shall
77	forfeit all rights to participate in the DROP. The member shall
78	advise his or her employer and the division in writing of the
79	date on which the DROP shall begin. Such beginning date may be
80	subsequent to the 12-month election period, but must be within
81	the 60-month or, with respect to members who are instructional
82	personnel as defined in s. 1012.01(2)(a)-(d), in grades K-12,
83	the 96-monthlimitation period as provided in subparagraph (b)1.
84	When establishing eligibility of the member to participate in
85	the DROP for the 60-month or, with respect to members who are
86	instructional personnel as defined in s. 1012.01(2)(a)-(d), in
87	grades K-12, the 96-monthmaximum participation period, the
88	member may elect to include or exclude any optional service
89	credit purchased by the member from the total service used to
90	establish the normal retirement date. A member with dual normal
91	retirement dates shall be eligible to elect to participate in
92	DROP within 12 months after attaining normal retirement date in
93	either class.
94	3. The employer of a member electing to participate in the
95	DROP, or employers if dually employed, shall acknowledge in
96	writing to the division the date the member's participation in
97	the DROP begins and the date the member's employment and DROP
98	participation will terminate.
99	4. Simultaneous employment of a participant by additional
100	Florida Retirement System employers subsequent to the
101	commencement of participation in the DROP shall be permissible
102	provided such employers acknowledge in writing a DROP
103	termination date no later than the participant's existing
104	termination date or the 60-month limitation period as provided
105	in subparagraph(b)1.
106	5. A DROP participant may change employers while
107	participating in the DROP, subject to the following:
108	a. A change of employment must take place without a break
109	in service so that the member receives salary for each month of
110	continuous DROP participation. If a member receives no salary
111	during a month, DROP participation shall cease unless the
112	employer verifies a continuation of the employment relationship
113	for such participant pursuant to s. 121.021(39)(b).
114	b. Such participant and new employer shall notify the
115	division on forms required by the division as to the identity of
116	the new employer.
117	c. The new employer shall acknowledge, in writing, the
118	participant's DROP termination date, which may be extended but
119	not beyond the original 60-month or, with respect to members who
120	are instructional personnel as defined in s. 1012.01(2)(a)-(d),
121	in grades K-12, the 96-monthperiod provided in subparagraph
122	(b)1., shall acknowledge liability for any additional retirement
123	contributions and interest required if the participant fails to
124	timely terminate employment, and shall be subject to the
125	adjustment required in sub-subparagraph (c)5.d.
126	6. Effective July 1, 2001, for instructional personnel as
127	defined in s. 1012.01(2), election to participate in the DROP
128	shall be made at any time following the date on which the member
129	first reaches normal retirement date. The member shall advise
130	his or her employer and the division in writing of the date on
131	which the Deferred Retirement Option Program shall begin. When
132	establishing eligibility of the member to participate in the
133	DROP for the 60-month or, with respect to members who are
134	instructional personnel as defined in s. 1012.01(2)(a)-(d), in
135	grades K-12, the 96-monthmaximum participation period, as
136	provided in subparagraph(b)1., the member may elect to include
137	or exclude any optional service credit purchased by the member
138	from the total service used to establish the normal retirement
139	date. A member with dual normal retirement dates shall be
140	eligible to elect to participate in either class.
141	(b) Participation in the DROP.--
142	1. An eligible member may elect to participate in the DROP
143	for a period not to exceed a maximum of 60 calendar months or,
144	with respect to members who are instructional personnel as
145	defined in s. 1012.01(2)(a)-(d), in grades K-12, a maximum of
146	96-monthsimmediately following the date on which the member
147	first reaches his or her normal retirement date or the date to
148	which he or she is eligible to defer his or her election to
149	participate as provided in subparagraph (a)2. However, a member
150	who has reached normal retirement date prior to the effective
151	date of the DROP shall be eligible to participate in the DROP
152	for a period of time not to exceed 60 calendar months or, with
153	respect to members who are instructional personnel as defined in
154	s. 1012.01(2)(a)-(d), in grades K-12, 96 calendar months
155	immediately following the effective date of the DROP, except a
156	member of the Special Risk Class who has reached normal
157	retirement date prior to the effective date of the DROP and
158	whose total accrued value exceeds 75 percent of average final
159	compensation as of his or her effective date of retirement shall
160	be eligible to participate in the DROP for no more than 36
161	calendar months immediately following the effective date of the
162	DROP.
163	2. Upon deciding to participate in the DROP, the member
164	shall submit, on forms required by the division:
165	a. A written election to participate in the DROP;
166	b. Selection of the DROP participation and termination
167	dates, which satisfy the limitations stated in paragraph(a) and
168	subparagraph 1. Such termination date shall be in a binding
169	letter of resignation with the employer, establishing a deferred
170	termination date. The member may change the termination date
171	within the limitations of subparagraph 1., but only with the
172	written approval of his or her employer;
173	c. A properly completed DROP application for service
174	retirement as provided in this section; and
175	d. Any other information required by the division.
176	3. The DROP participant shall be a retiree under the
177	Florida Retirement System for all purposes, except for paragraph
178	(5)(f) and subsection (9) and ss. 112.3173, 112.363, 121.053,
179	and 121.122. However, participation in the DROP does not alter
180	the participant's employment status and such employee shall not
181	be deemed retired from employment until his or her deferred
182	resignation is effective and termination occurs as provided in
183	s. 121.021(39).
184	4. Elected officers shall be eligible to participate in
185	the DROP subject to the following:
186	a. An elected officer who reaches normal retirement date
187	during a term of office may defer the election to participate in
188	the DROP until the next succeeding term in that office. Such
189	elected officer who exercises this option may participate in the
190	DROP for up to 60 calendar months or a period of no longer than
191	such succeeding term of office, whichever is less.
192	b. An elected or a nonelected participant may run for a
193	term of office while participating in DROP and, if elected,
194	extend the DROP termination date accordingly, except, however,
195	if such additional term of office exceeds the 60-month or, with
196	respect to members who are instructional personnel as defined in
197	s. 1012.01(2)(a)-(d), in grades K-12, the 96-monthlimitation
198	established in subparagraph 1., and the officer does not resign
199	from office within such 60-monthlimitation, the retirement and
200	the participant's DROP shall be null and void as provided in
201	sub-subparagraph (c)5.d.
202	c. An elected officer who is dually employed and elects to
203	participate in DROP shall be required to satisfy the definition
204	of termination within the 60-monthlimitation period as provided
205	in subparagraph 1. for the nonelected position and may continue
206	employment as an elected officer as provided in s. 121.053. The
207	elected officer will be enrolled as a renewed member in the
208	Elected Officers' Class or the Regular Class, as provided in ss.
209	121.053 and 121.22, on the first day of the month after
210	termination of employment in the nonelected position and
211	termination of DROP. Distribution of the DROP benefits shall be
212	made as provided in paragraph(c).
213	(c) Benefits payable under the DROP.--
214	1. Effective with the date of DROP participation, the
215	member's initial normal monthly benefit, including creditable
216	service, optional form of payment, and average final
217	compensation, and the effective date of retirement shall be
218	fixed. The beneficiary established under the Florida Retirement
219	System shall be the beneficiary eligible to receive any DROP
220	benefits payable if the DROP participant dies prior to the
221	completion of the period of DROP participation. In the event a
222	joint annuitant predeceases the member, the member may name a
223	beneficiary to receive accumulated DROP benefits payable. Such
224	retirement benefit, the annual cost of living adjustments
225	provided in s. 121.101, and interest shall accrue monthly in the
226	System Trust Fund. Such interest shall accrue at an effective
227	annual rate of 6.5 percent compounded monthly, on the prior
228	month's accumulated ending balance, up to the month of
229	termination or death.
230	2. Each employee who elects to participate in the DROP
231	shall be allowed to elect to receive a lump-sum payment for
232	accrued annual leave earned in accordance with agency policy
233	upon beginning participation in the DROP. Such accumulated leave
234	payment certified to the division upon commencement of DROP
235	shall be included in the calculation of the member's average
236	final compensation. The employee electing such lump-sum payment
237	upon beginning participation in DROP will not be eligible to
238	receive a second lump-sum payment upon termination, except to
239	the extent the employee has earned additional annual leave which
240	combined with the original payment does not exceed the maximum
241	lump-sum payment allowed by the employing agency's policy or
242	rules. Such early lump-sum payment shall be based on the hourly
243	wage of the employee at the time he or she begins participation
244	in the DROP. If the member elects to wait and receive such lump-
245	sum payment upon termination of DROP and termination of
246	employment with the employer, any accumulated leave payment made
247	at that time cannot be included in the member's retirement
248	benefit, which was determined and fixed by law when the employee
249	elected to participate in the DROP.
250	3. The effective date of DROP participation and the
251	effective date of retirement of a DROP participant shall be the
252	first day of the month selected by the member to begin
253	participation in the DROP, provided such date is properly
254	established, with the written confirmation of the employer, and
255	the approval of the division, on forms required by the division.
256	4. Normal retirement benefits and interest thereon shall
257	continue to accrue in the DROP until the established termination
258	date of the DROP, or until the participant terminates employment
259	or dies prior to such date. Although individual DROP accounts
260	shall not be established, a separate accounting of each
261	participant's accrued benefits under the DROP shall be
262	calculated and provided to participants.
263	5. At the conclusion of the participant's DROP, the
264	division shall distribute the participant's total accumulated
265	DROP benefits, subject to the following provisions:
266	a. The division shall receive verification by the
267	participant's employer or employers that such participant has
268	terminated employment as provided in s. 121.021(39)(b).
269	b. The terminated DROP participant or, if deceased, such
270	participant's named beneficiary, shall elect on forms provided
271	by the division to receive payment of the DROP benefits in
272	accordance with one of the options listed below. For a
273	participant or beneficiary who fails to elect a method of
274	payment within 60 days of termination of the DROP, the division
275	will pay a lump sum as provided in sub-sub-subparagraph (I).
276	(I) Lump sum.--All accrued DROP benefits, plus interest,
277	less withholding taxes remitted to the Internal Revenue Service,
278	shall be paid to the DROP participant or surviving beneficiary.
279	(II) Direct rollover.--All accrued DROP benefits, plus
280	interest, shall be paid from the DROP directly to the custodian
281	of an eligible retirement plan as defined in s. 402(c)(8)(B) of
282	the Internal Revenue Code. However, in the case of an eligible
283	rollover distribution to the surviving spouse of a deceased
284	participant, an eligible retirement plan is an individual
285	retirement account or an individual retirement annuity as
286	described in s. 402(c)(9) of the Internal Revenue Code.
287	(III) Partial lump sum.--A portion of the accrued DROP
288	benefits shall be paid to the DROP participant or surviving
289	spouse, less withholding taxes remitted to the Internal Revenue
290	Service, and the remaining DROP benefits shall be transferred
291	directly to the custodian of an eligible retirement plan as
292	defined in s. 402(c)(8)(B) of the Internal Revenue Code.
293	However, in the case of an eligible rollover distribution to the
294	surviving spouse of a deceased participant, an eligible
295	retirement plan is an individual retirement account or an
296	individual retirement annuity as described in s. 402(c)(9) of
297	the Internal Revenue Code. The proportions shall be specified by
298	the DROP participant or surviving beneficiary.
299	c. The form of payment selected by the DROP participant or
300	surviving beneficiary complies with the minimum distribution
301	requirements of the Internal Revenue Code.
302	d. A DROP participant who fails to terminate employment as
303	defined in s. 121.021(39)(b) shall be deemed not to be retired,
304	and the DROP election shall be null and void. Florida Retirement
305	System membership shall be reestablished retroactively to the
306	date of the commencement of the DROP, and each employer with
307	whom the participant continues employment shall be required to
308	pay to the System Trust Fund the difference between the DROP
309	contributions paid in paragraph (i) and the contributions
310	required for the applicable Florida Retirement System class of
311	membership during the period the member participated in the
312	DROP, plus 6.5 percent interest compounded annually.
313	6. The accrued benefits of any DROP participant, and any
314	contributions accumulated under such program, shall not be
315	subject to assignment, execution, attachment, or to any legal
316	process whatsoever, except for qualified domestic relations
317	orders by a court of competent jurisdiction, income deduction
318	orders as provided in s. 61.1301, and federal income tax levies.
319	7. DROP participants shall not be eligible for disability
320	retirement benefits as provided in subsection(4).
321	(d) Death benefits under the DROP.--
322	1. Upon the death of a DROP participant, the named
323	beneficiary shall be entitled to apply for and receive the
324	accrued benefits in the DROP as provided in sub-
325	subparagraph(c)5.b.
326	2. The normal retirement benefit accrued to the DROP
327	during the month of a participant's death shall be the final
328	monthly benefit credited for such DROP participant.
329	3. Eligibility to participate in the DROP terminates upon
330	death of the participant. If the participant dies on or after
331	the effective date of enrollment in the DROP, but prior to the
332	first monthly benefit being credited to the DROP, Florida
333	Retirement System benefits shall be paid in accordance with
334	subparagraph (7)(c)1. or subparagraph 2.
335	4. A DROP participants' survivors shall not be eligible to
336	receive Florida Retirement System death benefits as provided in
337	paragraph (7)(d).
338	(e) Cost-of-living adjustment.--On each July 1, the
339	participants' normal retirement benefit shall be increased as
340	provided in s. 121.101.
341	(f) Retiree health insurance subsidy.--DROP participants
342	are not eligible to apply for the retiree health insurance
343	subsidy payments as provided in s. 112.363 until such
344	participants have terminated employment and participation in the
345	DROP.
346	(g) Renewed membership.--DROP participants shall not be
347	eligible for renewed membership in the Florida Retirement System
348	under ss. 121.053 and 121.122 until termination of employment is
349	effectuated as provided in s. 121.021(39)(b).
350	(h) Employment limitation after DROP participation.--Upon
351	satisfying the definition of termination of employment as
352	provided in s. 121.021(39)(b), DROP participants shall be
353	subject to such reemployment limitations as other retirees.
354	Reemployment restrictions applicable to retirees as provided in
355	subsection (9) shall not apply to DROP participants until their
356	employment and participation in the DROP are terminated.
357	(i) Contributions.--
358	1. All employers paying the salary of a DROP participant
359	filling a regularly established position shall contribute 8.0
360	percent of such participant's gross compensation for the period
361	of July 1, 2002, through June 30, 2003, and 11.56 percent of
362	such compensation thereafter, which shall constitute the entire
363	employer DROP contribution with respect to such participant.
364	Such contributions, payable to the System Trust Fund in the same
365	manner as required in s. 121.071, shall be made as appropriate
366	for each pay period and are in addition to contributions
367	required for social security and the Retiree Health Insurance
368	Subsidy Trust Fund. Such employer, social security, and health
369	insurance subsidy contributions are not included in the DROP.
370	2. The employer shall, in addition to subparagraph 1.,
371	also withhold one-half of the entire social security
372	contribution required for the participant. Contributions for
373	social security by each participant and each employer, in the
374	amount required for social security coverage as now or hereafter
375	provided by the federal Social Security Act, shall be in
376	addition to contributions specified in subparagraph 1.
377	3. All employers paying the salary of a DROP participant
378	filling a regularly established position shall contribute the
379	percent of such participant's gross compensation required in s.
380	121.071(4), which shall constitute the employer's health
381	insurance subsidy contribution with respect to such participant.
382	Such contributions shall be deposited by the administrator in
383	the Retiree Health Insurance Subsidy Trust Fund.
384	(j) Forfeiture of retirement benefits.--Nothing in this
385	section shall be construed to remove DROP participants from the
386	scope of s. 8(d), Art. II of the State Constitution, s.
387	112.3173, and paragraph (5)(f). DROP participants who commit a
388	specified felony offense while employed will be subject to
389	forfeiture of all retirement benefits, including DROP benefits,
390	pursuant to those provisions of law.
391	(k) Administration of program.--The division shall make
392	such rules as are necessary for the effective and efficient
393	administration of this subsection. The division shall not be
394	required to advise members of the federal tax consequences of an
395	election related to the DROP but may advise members to seek
396	independent advice.
397	Section 2. Commencing on July 1, 2003, there shall be a
398	one-time period of 45 days in which members of the Florida
399	Retirement System who have reached normal retirement date and
400	have not retired and did not elect to participate in the DROP
401	within one year of reaching normal retirement age may elect to
402	participate in the program.
403	Section 3. The Legislature finds that a proper and
404	legitimate state purpose is served when employees and retirees
405	of the state and of its political subdivisions, and the
406	dependants, survivors, and beneficiaries of such employees and
407	retirees, are extended the basic protections afforded by
408	governmental retirement systems that provide fair and adequate
409	benefits and that are managed, administered, and funded in an
410	actuarially sound manner, as required by s. 14, Art. X of the
411	State Constitution and part VII of chapter 112, Florida
412	Statutes. Therefore, the Legislature hereby determines and
413	declares that the provisions of this act fulfill an important
414	state interest.
415	Section 4. This act shall take effect June 30, 2003.