HB 5703

1
A bill to be entitled
2An act relating to retirement; amending s. 112.64, F.S.;
3providing limitations for the total contributions made to
4certain retirement systems or plans; prohibiting certain
5retirement systems or plans from amortizing their unfunded
6liabilities over a specified period; limiting the
7amortization bases created in specified future plan years;
8providing disclosure requirements; amending s. 121.053,
9F.S.; requiring employers to make specified retirement
10contributions on behalf of certain employees in the
11Elected Officers' Class, including those in DROP;
12providing exceptions; amending s. 121.055, F.S.; requiring
13employers to make specified retirement contributions on
14behalf of certain employees who have withdrawn from the
15Senior Management Service Class; providing an exception;
16amending s. 121.122, F.S.; requiring employers to make
17specified retirement contributions on behalf of certain
18reemployed retirees; providing an exception; amending ss.
19112.05, 121.051, 121.091, 121.35, and 1012.875, F.S.;
20providing exceptions to required employer contributions on
21behalf of certain program participants in conformance with
22changes made by this act; providing a declaration of
23important state interest; providing an effective date.
24
25Be It Enacted by the Legislature of the State of Florida:
26
27     Section 1.  Paragraph (c) of subsection (4) of section
28112.05, Florida Statutes, is amended to read:
29     112.05  Retirement; cost-of-living adjustment; employment
30after retirement.-
31     (4)
32     (c)  An employer, upon employment of any person who has
33been retired under a state-administered retirement program,
34shall pay retirement contributions in an amount equal to the
35unfunded actuarial accrued liability portion of the employer
36contribution which would be required for a regular member of the
37Florida Retirement System, except as provided in s.
38112.64(2)(b).
39     Section 2.  Subsections (2) and (3) of section 112.64,
40Florida Statutes, are amended to read:
41     112.64  Administration of funds; amortization of unfunded
42liability.-
43     (2)(a)  From and after October 1, 1980, for those plans in
44existence on October 1, 1980, the total contributions to the
45retirement system or plan shall be sufficient to meet the normal
46cost of the retirement system or plan and to amortize the
47unfunded liability, if any, within 40 years; however, nothing
48contained in this paragraph does not permit subsection permits
49any retirement system or plan to amortize its unfunded
50liabilities over a period longer than that which remains under
51its current amortization schedule.
52     (b)  Notwithstanding paragraph (a), for retirement systems
53or plans with an actuarial funded ratio of 90 percent or greater
54in the plan year ending in calendar year 2008, calculated using
55the Governmental Accounting Standards Board Statement 25 basis,
56the provisions of subparagraph 1. may be applied to funding for
57plan years beginning in calendar years 2010, 2011, and 2012:
58     1.  Total contributions to the retirement system or plan
59may be limited to the greater of:
60     a.  The contribution rate in effect for the previous plan
61year; or
62     b.  The normal cost of the retirement system or plan in the
63current plan year.
64     2.  This paragraph does not permit any retirement system or
65plan to amortize its unfunded liabilities over a period longer
66than that which remains under its existing amortization
67schedules. New amortization bases created in plan years
68beginning in calendar years 2010, 2011, and 2012 may not exceed
69the maximum duration allowed in this section, notwithstanding
70any postponed amortization payments resulting from the
71application of this paragraph.
72     3.  Any retirement system or plan that uses the provisions
73of subparagraph 1. must disclose this option of funding in its
74actuarial valuation for affected plan years beginning in
75calendar years 2010, 2011, and 2012.
76     (3)(a)  For a retirement system or plan which comes into
77existence after October 1, 1980, the unfunded liability, if any,
78shall be amortized within 40 years of the first plan year.
79     (b)  Notwithstanding paragraph (a), for retirement systems
80or plans with an actuarial funded ratio of 90 percent or greater
81in the plan year ending in calendar year 2008, calculated using
82the Governmental Accounting Standards Board Statement 25 basis,
83the provisions of subparagraph 1. may be applied to funding for
84plan years beginning in calendar years 2010, 2011, and 2012:
85     1.  Total contributions to the retirement system or plan
86may be limited to the greater of:
87     a.  The contribution rate in effect for the previous plan
88year; or
89     b.  The normal cost of the retirement system or plan in the
90current plan year.
91     2.  This paragraph does not permit any retirement system or
92plan to amortize its unfunded liabilities over a period longer
93than that which remains under its existing amortization
94schedules. New amortization bases created in plan years
95beginning in calendar years 2010, 2011, and 2012 may not exceed
96the maximum duration allowed in this section, notwithstanding
97any postponed amortization payments resulting from the
98application of this paragraph.
99     3.  Any retirement system or plan that uses the provisions
100of subparagraph 1. must disclose this option of funding in its
101actuarial valuation for affected plan years beginning in
102calendar years 2010, 2011, and 2012.
103     Section 3.  Paragraph (c) of subsection (2) of section
104121.051, Florida Statutes, is amended to read:
105     121.051  Participation in the system.-
106     (2)  OPTIONAL PARTICIPATION.-
107     (c)  Employees of public community colleges or charter
108technical career centers sponsored by public community colleges,
109designated in s. 1000.21(3), who are members of the Regular
110Class of the Florida Retirement System and who comply with the
111criteria set forth in this paragraph and s. 1012.875 may, in
112lieu of participating in the Florida Retirement System, elect to
113withdraw from the system altogether and participate in the State
114Community College System Optional Retirement Program provided by
115the employing agency under s. 1012.875.
116     1.  Through June 30, 2001, the cost to the employer for
117such annuity equals the normal cost portion of the employer
118retirement contribution which would be required if the employee
119were a member of the Regular Class defined benefit program, plus
120the portion of the contribution rate required by s. 112.363(8)
121which would otherwise be assigned to the Retiree Health
122Insurance Subsidy Trust Fund. Effective July 1, 2001, each
123employer shall contribute on behalf of each participant in the
124optional program an amount equal to 10.43 percent of the
125participant's gross monthly compensation. The employer shall
126deduct an amount for the administration of the program. The
127employer shall contribute an additional amount to the Florida
128Retirement System Trust Fund equal to the unfunded actuarial
129accrued liability portion of the Regular Class contribution
130rate, except as provided in s. 112.64(2)(b).
131     2.  The decision to participate in an optional retirement
132program is irrevocable as long as the employee holds a position
133eligible for participation, except as provided in subparagraph
1343. Any service creditable under the Florida Retirement System is
135retained after the member withdraws from the system; however,
136additional service credit in the system may not be earned while
137a member of the optional retirement program.
138     3.  An employee who has elected to participate in the
139optional retirement program shall have one opportunity, at the
140employee's discretion, to transfer from the optional retirement
141program to the defined benefit program of the Florida Retirement
142System or to the Public Employee Optional Retirement Program,
143subject to the terms of the applicable optional retirement
144program contracts.
145     a.  If the employee chooses to move to the Public Employee
146Optional Retirement Program, any contributions, interest, and
147earnings creditable to the employee under the State Community
148College System Optional Retirement Program are retained by the
149employee in the State Community College System Optional
150Retirement Program, and the applicable provisions of s.
151121.4501(4) govern the election.
152     b.  If the employee chooses to move to the defined benefit
153program of the Florida Retirement System, the employee shall
154receive service credit equal to his or her years of service
155under the State Community College System Optional Retirement
156Program.
157     (I)  The cost for such credit is the amount representing
158the present value of the employee's accumulated benefit
159obligation for the affected period of service. The cost shall be
160calculated as if the benefit commencement occurs on the first
161date the employee becomes eligible for unreduced benefits, using
162the discount rate and other relevant actuarial assumptions that
163were used to value the Florida Retirement System defined benefit
164plan liabilities in the most recent actuarial valuation. The
165calculation must include any service already maintained under
166the defined benefit plan in addition to the years under the
167State Community College System Optional Retirement Program. The
168present value of any service already maintained must be applied
169as a credit to total cost resulting from the calculation. The
170division shall ensure that the transfer sum is prepared using a
171formula and methodology certified by an enrolled actuary.
172     (II)  The employee must transfer from his or her State
173Community College System Optional Retirement Program account and
174from other employee moneys as necessary, a sum representing the
175present value of the employee's accumulated benefit obligation
176immediately following the time of such movement, determined
177assuming that attained service equals the sum of service in the
178defined benefit program and service in the State Community
179College System Optional Retirement Program.
180     4.  Participation in the optional retirement program is
181limited to employees who satisfy the following eligibility
182criteria:
183     a.  The employee must be otherwise eligible for membership
184or renewed membership in the Regular Class of the Florida
185Retirement System, as provided in s. 121.021(11) and (12) or s.
186121.122.
187     b.  The employee must be employed in a full-time position
188classified in the Accounting Manual for Florida's Public
189Community Colleges as:
190     (I)  Instructional; or
191     (II)  Executive Management, Instructional Management, or
192Institutional Management, if a community college determines that
193recruiting to fill a vacancy in the position is to be conducted
194in the national or regional market, and the duties and
195responsibilities of the position include the formulation,
196interpretation, or implementation of policies, or the
197performance of functions that are unique or specialized within
198higher education and that frequently support the mission of the
199community college.
200     c.  The employee must be employed in a position not
201included in the Senior Management Service Class of the Florida
202Retirement System, as described in s. 121.055.
203     5.  Participants in the program are subject to the same
204reemployment limitations, renewed membership provisions, and
205forfeiture provisions as are applicable to regular members of
206the Florida Retirement System under ss. 121.091(9), 121.122, and
207121.091(5), respectively. A participant who receives a program
208distribution funded by employer contributions shall be deemed to
209be retired from a state-administered retirement system if the
210participant is subsequently employed with an employer that
211participates in the Florida Retirement System.
212     6.  Eligible community college employees are compulsory
213members of the Florida Retirement System until, pursuant to s.
2141012.875, a written election to withdraw from the system and
215participate in the State Community College System Optional
216Retirement Program is filed with the program administrator and
217received by the division.
218     a.  A community college employee whose program eligibility
219results from initial employment must be enrolled in the State
220Community College System Optional Retirement Program retroactive
221to the first day of eligible employment. The employer retirement
222contributions paid through the month of the employee plan change
223shall be transferred to the community college to the employee's
224optional program account, and, effective the first day of the
225next month, the employer shall pay the applicable contributions
226based upon subparagraph 1.
227     b.  A community college employee whose program eligibility
228is due to the subsequent designation of the employee's position
229as one of those specified in subparagraph 4., or due to the
230employee's appointment, promotion, transfer, or reclassification
231to a position specified in subparagraph 4., must be enrolled in
232the program on the first day of the first full calendar month
233that such change in status becomes effective. The employer
234retirement contributions paid from the effective date through
235the month of the employee plan change must be transferred to the
236community college to the employee's optional program account,
237and, effective the first day of the next month, the employer
238shall pay the applicable contributions based upon subparagraph
2391.
240     7.  Effective July 1, 2003, through December 31, 2008, any
241participant of the State Community College System Optional
242Retirement Program who has service credit in the defined benefit
243plan of the Florida Retirement System for the period between his
244or her first eligibility to transfer from the defined benefit
245plan to the optional retirement program and the actual date of
246transfer may, during employment, transfer to the optional
247retirement program a sum representing the present value of the
248accumulated benefit obligation under the defined benefit
249retirement program for the period of service credit. Upon
250transfer, all service credit previously earned under the defined
251benefit program of the Florida Retirement System during this
252period is nullified for purposes of entitlement to a future
253benefit under the defined benefit program of the Florida
254Retirement System.
255     Section 4.  Paragraph (a) of subsection (3) and paragraph
256(a) of subsection (7) of section 121.053, Florida Statutes, are
257amended to read:
258     121.053  Participation in the Elected Officers' Class for
259retired members.-
260     (3)  On or after July 1, 2010:
261     (a)  A retiree of a state-administered retirement system
262who is elected or appointed for the first time to an elective
263office in a regularly established position with a covered
264employer may not reenroll in the Florida Retirement System. Each
265employer shall contribute on behalf of each employed retiree
266ineligible for renewed membership under this paragraph an amount
267equal to the unfunded actuarial liability portion of the
268employer contribution which would be required for members of the
269Elected Officers' Class or the Regular Class, as appropriate, in
270the Florida Retirement System, except as provided in s.
271112.64(2)(b).
272     (7)  A member who is elected or appointed to an elective
273office and who is participating in the Deferred Retirement
274Option Program is not subject to termination as defined in s.
275121.021, or reemployment limitations as provided in s.
276121.091(9), until the end of his or her current term of office
277or, if the officer is consecutively elected or reelected to an
278elective office eligible for coverage under the Florida
279Retirement System, until he or she no longer holds an elective
280office, as follows:
281     (a)  At the end of the 60-month DROP period:
282     1.  The officer's DROP account may not accrue additional
283monthly benefits, but does continue to earn interest as provided
284in s. 121.091(13). However, an officer whose DROP participation
285begins on or after July 1, 2010, may not continue to earn such
286interest.
287     2.  Except for the payment of the unfunded actuarial
288liability funding, retirement contributions are not required of
289the employer of the elected officer and additional retirement
290credit may not be earned under the Florida Retirement System.
291Each employer shall contribute on behalf of each nonenrolled
292employee under this subsection an amount equal to the unfunded
293actuarial liability portion of the employer contribution which
294would be required for members of the Elected Officers' Class or
295the Regular Class, as appropriate, in the Florida Retirement
296System, except as provided in s. 112.64(2)(b).
297     Section 5.  Paragraph (b) of subsection (1) and paragraph
298(d) of subsection (6) of section 121.055, Florida Statutes, are
299amended to read:
300     121.055  Senior Management Service Class.-There is hereby
301established a separate class of membership within the Florida
302Retirement System to be known as the "Senior Management Service
303Class," which shall become effective February 1, 1987.
304     (1)
305     (b)1.  Except as provided in subparagraph 2., effective
306January 1, 1990, participation in the Senior Management Service
307Class shall be compulsory for the president of each community
308college, the manager of each participating city or county, and
309all appointed district school superintendents. Effective January
3101, 1994, additional positions may be designated for inclusion in
311the Senior Management Service Class of the Florida Retirement
312System, provided that:
313     a.  Positions to be included in the class shall be
314designated by the local agency employer. Notice of intent to
315designate positions for inclusion in the class shall be
316published once a week for 2 consecutive weeks in a newspaper of
317general circulation published in the county or counties
318affected, as provided in chapter 50.
319     b.  Up to 10 nonelective full-time positions may be
320designated for each local agency employer reporting to the
321Department of Management Services; for local agencies with 100
322or more regularly established positions, additional nonelective
323full-time positions may be designated, not to exceed 1 percent
324of the regularly established positions within the agency.
325     c.  Each position added to the class must be a managerial
326or policymaking position filled by an employee who is not
327subject to continuing contract and serves at the pleasure of the
328local agency employer without civil service protection, and who:
329     (I)  Heads an organizational unit; or
330     (II)  Has responsibility to effect or recommend personnel,
331budget, expenditure, or policy decisions in his or her areas of
332responsibility.
333     2.  In lieu of participation in the Senior Management
334Service Class, members of the Senior Management Service Class
335pursuant to the provisions of subparagraph 1. may withdraw from
336the Florida Retirement System altogether. The decision to
337withdraw from the Florida Retirement System shall be irrevocable
338for as long as the employee holds such a position. Any service
339creditable under the Senior Management Service Class shall be
340retained after the member withdraws from the Florida Retirement
341System; however, additional service credit in the Senior
342Management Service Class shall not be earned after such
343withdrawal. Such members shall not be eligible to participate in
344the Senior Management Service Optional Annuity Program. Each
345employer shall contribute on behalf of each withdrawn employee
346under this subparagraph an amount equal to the unfunded
347actuarial accrued liability portion of the employer contribution
348which would be required for members of the Senior Management
349Service Class in the Florida Retirement System, except as
350provided in s. 112.64(2)(b).
351     3.  Effective January 1, 2006, through June 30, 2006, an
352employee who has withdrawn from the Florida Retirement System
353under subparagraph 2. has one opportunity to elect to
354participate in either the defined benefit program or the Public
355Employee Optional Retirement Program of the Florida Retirement
356System.
357     a.  If the employee elects to participate in the Public
358Employee Optional Retirement Program, membership shall be
359prospective, and the applicable provisions of s. 121.4501(4)
360shall govern the election.
361     b.  If the employee elects to participate in the defined
362benefit program of the Florida Retirement System, the employee
363shall, upon payment to the system trust fund of the amount
364calculated under sub-sub-subparagraph (I), receive service
365credit for prior service based upon the time during which the
366employee had withdrawn from the system.
367     (I)  The cost for such credit shall be an amount
368representing the actuarial accrued liability for the affected
369period of service. The cost shall be calculated using the
370discount rate and other relevant actuarial assumptions that were
371used to value the Florida Retirement System defined benefit plan
372liabilities in the most recent actuarial valuation. The
373calculation shall include any service already maintained under
374the defined benefit plan in addition to the period of
375withdrawal. The actuarial accrued liability attributable to any
376service already maintained under the defined benefit plan shall
377be applied as a credit to the total cost resulting from the
378calculation. The division shall ensure that the transfer sum is
379prepared using a formula and methodology certified by an
380actuary.
381     (II)  The employee must transfer a sum representing the net
382cost owed for the actuarial accrued liability in sub-sub-
383subparagraph (I) immediately following the time of such
384movement, determined assuming that attained service equals the
385sum of service in the defined benefit program and the period of
386withdrawal.
387     (6)
388     (d)  Contributions.-
389     1.  Through June 30, 2001, each employer shall contribute
390on behalf of each participant in the Senior Management Service
391Optional Annuity Program an amount equal to the normal cost
392portion of the employer retirement contribution which would be
393required if the participant were a Senior Management Service
394Class member of the Florida Retirement System defined benefit
395program, plus the portion of the contribution rate required in
396s. 112.363(8) that would otherwise be assigned to the Retiree
397Health Insurance Subsidy Trust Fund. Effective July 1, 2001,
398each employer shall contribute on behalf of each participant in
399the optional program an amount equal to 12.49 percent of the
400participant's gross monthly compensation. The department shall
401deduct an amount approved by the Legislature to provide for the
402administration of this program. The payment of the contributions
403to the optional program which is required by this subparagraph
404for each participant shall be made by the employer to the
405department, which shall forward the contributions to the
406designated company or companies contracting for payment of
407benefits for the participant under the program.
408     2.  Each employer shall contribute on behalf of each
409participant in the Senior Management Service Optional Annuity
410Program an amount equal to the unfunded actuarial accrued
411liability portion of the employer contribution which would be
412required for members of the Senior Management Service Class in
413the Florida Retirement System, except as provided in s.
414112.64(2)(b). This contribution shall be paid to the department
415for transfer to the Florida Retirement System Trust Fund.
416     3.  An Optional Annuity Program Trust Fund shall be
417established in the State Treasury and administered by the
418department to make payments to provider companies on behalf of
419the optional annuity program participants, and to transfer the
420unfunded liability portion of the state optional annuity program
421contributions to the Florida Retirement System Trust Fund.
422     4.  Contributions required for social security by each
423employer and each participant, in the amount required for social
424security coverage as now or hereafter may be provided by the
425federal Social Security Act shall be maintained for each
426participant in the Senior Management Service retirement program
427and shall be in addition to the retirement contributions
428specified in this paragraph.
429     5.  Each participant in the Senior Management Service
430Optional Annuity Program may contribute by way of salary
431reduction or deduction a percentage amount of the participant's
432gross compensation not to exceed the percentage amount
433contributed by the employer to the optional annuity program.
434Payment of the participant's contributions shall be made by the
435employer to the department, which shall forward the
436contributions to the designated company or companies contracting
437for payment of benefits for the participant under the program.
438     Section 6.  Paragraph (c) of subsection (9) of section
439121.091, Florida Statutes, is amended to read:
440     121.091  Benefits payable under the system.-Benefits may
441not be paid under this section unless the member has terminated
442employment as provided in s. 121.021(39)(a) or begun
443participation in the Deferred Retirement Option Program as
444provided in subsection (13), and a proper application has been
445filed in the manner prescribed by the department. The department
446may cancel an application for retirement benefits when the
447member or beneficiary fails to timely provide the information
448and documents required by this chapter and the department's
449rules. The department shall adopt rules establishing procedures
450for application for retirement benefits and for the cancellation
451of such application when the required information or documents
452are not received.
453     (9)  EMPLOYMENT AFTER RETIREMENT; LIMITATION.-
454     (c)  Any person whose retirement is effective on or after
455July 1, 2010, or whose participation in the Deferred Retirement
456Option Program terminates on or after July 1, 2010, who is
457retired under this chapter, except under the disability
458retirement provisions of subsection (4) or as provided in s.
459121.053, may be reemployed by an employer that participates in a
460state-administered retirement system and receive retirement
461benefits and compensation from that employer. However, a person
462may not be reemployed by an employer participating in the
463Florida Retirement System before meeting the definition of
464termination in s. 121.021 and may not receive both a salary from
465the employer and retirement benefits for 6 calendar months after
466meeting the definition of termination. However, a DROP
467participant shall continue employment and receive a salary
468during the period of participation in the Deferred Retirement
469Option Program, as provided in subsection (13).
470     1.  The reemployed retiree may not renew membership in the
471Florida Retirement System.
472     2.  The employer shall pay retirement contributions in an
473amount equal to the unfunded actuarial liability portion of the
474employer contribution that would be required for active members
475of the Florida Retirement System in addition to the
476contributions required by s. 121.76, except as provided in s.
477112.64(2)(b).
478     3.  A retiree initially reemployed in violation of this
479paragraph and an employer that employs or appoints such person
480are jointly and severally liable for reimbursement of any
481retirement benefits paid to the retirement trust fund from which
482the benefits were paid, including the Florida Retirement System
483Trust Fund and the Public Employee Optional Retirement Program
484Trust Fund, as appropriate. The employer must have a written
485statement from the employee that he or she is not retired from a
486state-administered retirement system. Retirement benefits shall
487remain suspended until repayment is made. Benefits suspended
488beyond the end of the retiree's 6-month reemployment limitation
489period shall apply toward the repayment of benefits received in
490violation of this paragraph.
491     Section 7.  Subsection (2) of section 121.122, Florida
492Statutes, is amended to read:
493     121.122  Renewed membership in system.-
494     (2)  A retiree of a state-administered retirement system
495who is initially reemployed on or after July 1, 2010, is not
496eligible for renewed membership. Each employer shall contribute
497on behalf of each reemployed retiree ineligible for membership
498under this subsection an amount equal to the unfunded actuarial
499liability portion of the employer contribution which would be
500required for the membership class covering the position held,
501except as provided in s. 112.64(2)(b).
502     Section 8.  Paragraph (b) of subsection (4) of section
503121.35, Florida Statutes, is amended to read:
504     121.35  Optional retirement program for the State
505University System.-
506     (4)  CONTRIBUTIONS.-
507     (b)  Each employer shall contribute on behalf of each
508participant in the optional retirement program an amount equal
509to the unfunded actuarial accrued liability portion of the
510employer contribution which would be required for members of the
511Florida Retirement System, except as provided in s.
512112.64(2)(b). This contribution shall be paid to the department
513for transfer to the Florida Retirement System Trust Fund.
514     Section 9.  Paragraph (b) of subsection (4) of section
5151012.875, Florida Statutes, is amended to read:
516     1012.875  State Community College System Optional
517Retirement Program.-Each community college may implement an
518optional retirement program, if such program is established
519therefor pursuant to s. 1001.64(20), under which annuity or
520other contracts providing retirement and death benefits may be
521purchased by, and on behalf of, eligible employees who
522participate in the program, in accordance with s. 403(b) of the
523Internal Revenue Code. Except as otherwise provided herein, this
524retirement program, which shall be known as the State Community
525College System Optional Retirement Program, may be implemented
526and administered only by an individual community college or by a
527consortium of community colleges.
528     (4)
529     (b)  Each college must contribute on behalf of each program
530participant an amount equal to the unfunded actuarial accrued
531liability portion of the employer contribution which would be
532required if the program participant were a member of the Regular
533Class of the Florida Retirement System, except as provided in s.
534112.64(2)(b). Payment of this contribution must be made directly
535by the college to the department for deposit in the Florida
536Retirement System Trust Fund.
537     Section 10.  The Legislature finds that a proper and
538legitimate state purpose is served when employees and retirees
539of the state and its political subdivisions, and the dependents,
540survivors, and beneficiaries of such employees and retirees, are
541extended the basic protections afforded by governmental
542retirement systems. These persons must be provided benefits that
543are fair and adequate and that are managed, administered, and
544funded in an actuarially sound manner, as required by s. 14,
545Article X of the State Constitution and part VII of chapter 112,
546Florida Statutes. Therefore, the Legislature determines and
547declares that this act fulfills an important state interest.
548     Section 11.  This act shall take effect July 1, 2010.


CODING: Words stricken are deletions; words underlined are additions.