Florida Senate - 2012         (PROPOSED COMMITTEE BILL) SPB 7056
       
       
       
       FOR CONSIDERATION By the Committee on Budget
       
       
       
       
       576-03264-12                                          20127056__
    1                        A bill to be entitled                      
    2         An act relating to retirement; amending s. 121.051,
    3         F.S.; revising employer contributions for members of
    4         the Florida Retirement System who are employees of
    5         public community colleges or charter technical career
    6         centers sponsored by public community colleges on a
    7         certain date; amending s. 121.055, F.S.; revising
    8         employer contributions for members of the Senior
    9         Management Service Class of the Florida Retirement
   10         System on a certain date; amending s. 121.35, F.S.;
   11         revising employer contributions for members of the
   12         optional retirement program for the State University
   13         System on a certain date; amending s. 121.71, F.S.;
   14         revising the required employer retirement contribution
   15         rates for members of each membership class and
   16         subclass of the Florida Retirement System; amending s.
   17         121.72, F.S.; revising allocations from the Florida
   18         Retirement System Contributions Clearing Trust Fund to
   19         investment plan member accounts on a certain date;
   20         amending s. 1012.875, F.S.; revising employer
   21         contributions for members of the State Community
   22         College System Optional Retirement Program on a
   23         certain date; providing that the act fulfills an
   24         important state interest; providing an effective date.
   25  
   26  Be It Enacted by the Legislature of the State of Florida:
   27  
   28         Section 1. Paragraph (c) of subsection (2) of section
   29  121.051, Florida Statutes, is amended to read:
   30         121.051 Participation in the system.—
   31         (2) OPTIONAL PARTICIPATION.—
   32         (c) Employees of public community colleges or charter
   33  technical career centers sponsored by public community colleges,
   34  designated in s. 1000.21(3), who are members of the Regular
   35  Class of the Florida Retirement System and who comply with the
   36  criteria set forth in this paragraph and s. 1012.875 may, in
   37  lieu of participating in the Florida Retirement System, elect to
   38  withdraw from the system altogether and participate in the State
   39  Community College System Optional Retirement Program provided by
   40  the employing agency under s. 1012.875.
   41         1.a. Through June 30, 2001, the cost to the employer for
   42  benefits under the optional retirement program equals the normal
   43  cost portion of the employer retirement contribution which would
   44  be required if the employee were a member of the pension plan’s
   45  Regular Class, plus the portion of the contribution rate
   46  required by s. 112.363(8) which would otherwise be assigned to
   47  the Retiree Health Insurance Subsidy Trust Fund.
   48         b. Effective July 1, 2001, through June 30, 2011, each
   49  employer shall contribute on behalf of each member of the
   50  optional program an amount equal to 10.43 percent of the
   51  employee’s gross monthly compensation. The employer shall deduct
   52  an amount for the administration of the program.
   53         c. Effective July 1, 2011, through June 30, 2012, each
   54  member shall contribute an amount equal to the employee
   55  contribution required under s. 121.71(3). The employer shall
   56  contribute on behalf of each program member an amount equal to
   57  the difference between 10.43 percent of the employee’s gross
   58  monthly compensation and the employee’s required contribution
   59  based on the employee’s gross monthly compensation.
   60         d. Effective July 1, 2012, each member shall contribute an
   61  amount equal to the employee contribution required under s.
   62  121.71(3). The employer shall contribute on behalf of each
   63  program member an amount equal to the difference between 8.15
   64  percent of the employee’s gross monthly compensation and the
   65  employee’s required contribution based on the employee’s gross
   66  monthly compensation.
   67         e.d. The employer shall contribute an additional amount to
   68  the Florida Retirement System Trust Fund equal to the unfunded
   69  actuarial accrued liability portion of the Regular Class
   70  contribution rate.
   71         2. The decision to participate in the optional retirement
   72  program is irrevocable as long as the employee holds a position
   73  eligible for participation, except as provided in subparagraph
   74  3. Any service creditable under the Florida Retirement System is
   75  retained after the member withdraws from the system; however,
   76  additional service credit in the system may not be earned while
   77  a member of the optional retirement program.
   78         3. An employee who has elected to participate in the
   79  optional retirement program shall have one opportunity, at the
   80  employee’s discretion, to transfer from the optional retirement
   81  program to the pension plan of the Florida Retirement System or
   82  to the investment plan established under part II of this
   83  chapter, subject to the terms of the applicable optional
   84  retirement program contracts.
   85         a. If the employee chooses to move to the investment plan,
   86  any contributions, interest, and earnings creditable to the
   87  employee under the optional retirement program are retained by
   88  the employee in the optional retirement program, and the
   89  applicable provisions of s. 121.4501(4) govern the election.
   90         b. If the employee chooses to move to the pension plan of
   91  the Florida Retirement System, the employee shall receive
   92  service credit equal to his or her years of service under the
   93  optional retirement program.
   94         (I) The cost for such credit is the amount representing the
   95  present value of the employee’s accumulated benefit obligation
   96  for the affected period of service. The cost shall be calculated
   97  as if the benefit commencement occurs on the first date the
   98  employee becomes eligible for unreduced benefits, using the
   99  discount rate and other relevant actuarial assumptions that were
  100  used to value the Florida Retirement System Pension Plan
  101  liabilities in the most recent actuarial valuation. The
  102  calculation must include any service already maintained under
  103  the pension plan in addition to the years under the optional
  104  retirement program. The present value of any service already
  105  maintained must be applied as a credit to total cost resulting
  106  from the calculation. The division must shall ensure that the
  107  transfer sum is prepared using a formula and methodology
  108  certified by an enrolled actuary.
  109         (II) The employee must transfer from his or her optional
  110  retirement program account and from other employee moneys as
  111  necessary, a sum representing the present value of the
  112  employee’s accumulated benefit obligation immediately following
  113  the time of such movement, determined assuming that attained
  114  service equals the sum of service in the pension plan and
  115  service in the optional retirement program.
  116         4. Participation in the optional retirement program is
  117  limited to employees who satisfy the following eligibility
  118  criteria:
  119         a. The employee is otherwise eligible for membership or
  120  renewed membership in the Regular Class of the Florida
  121  Retirement System, as provided in s. 121.021(11) and (12) or s.
  122  121.122.
  123         b. The employee is employed in a full-time position
  124  classified in the Accounting Manual for Florida’s Public
  125  Community Colleges as:
  126         (I) Instructional; or
  127         (II) Executive Management, Instructional Management, or
  128  Institutional Management and the community college determines
  129  that recruiting to fill a vacancy in the position is to be
  130  conducted in the national or regional market, and the duties and
  131  responsibilities of the position include the formulation,
  132  interpretation, or implementation of policies, or the
  133  performance of functions that are unique or specialized within
  134  higher education and that frequently support the mission of the
  135  community college.
  136         c. The employee is employed in a position not included in
  137  the Senior Management Service Class of the Florida Retirement
  138  System as described in s. 121.055.
  139         5. Members of the program are subject to the same
  140  reemployment limitations, renewed membership provisions, and
  141  forfeiture provisions applicable to regular members of the
  142  Florida Retirement System under ss. 121.091(9), 121.122, and
  143  121.091(5), respectively. A member who receives a program
  144  distribution funded by employer and required employee
  145  contributions is deemed to be retired from a state-administered
  146  retirement system if the member is subsequently employed with an
  147  employer that participates in the Florida Retirement System.
  148         6. Eligible community college employees are compulsory
  149  members of the Florida Retirement System until, pursuant to s.
  150  1012.875, a written election to withdraw from the system and
  151  participate in the optional retirement program is filed with the
  152  program administrator and received by the division.
  153         a. A community college employee whose program eligibility
  154  results from initial employment shall be enrolled in the
  155  optional retirement program retroactive to the first day of
  156  eligible employment. The employer and employee retirement
  157  contributions paid through the month of the employee plan change
  158  shall be transferred to the community college to the employee’s
  159  optional program account, and, effective the first day of the
  160  next month, the employer shall pay the applicable contributions
  161  based upon subparagraph 1.
  162         b. A community college employee whose program eligibility
  163  is due to the subsequent designation of the employee’s position
  164  as one of those specified in subparagraph 4., or due to the
  165  employee’s appointment, promotion, transfer, or reclassification
  166  to a position specified in subparagraph 4., must be enrolled in
  167  the program on the first day of the first full calendar month
  168  that such change in status becomes effective. The employer and
  169  employee retirement contributions paid from the effective date
  170  through the month of the employee plan change must be
  171  transferred to the community college to the employee’s optional
  172  program account, and, effective the first day of the next month,
  173  the employer shall pay the applicable contributions based upon
  174  subparagraph 1.
  175         7. Effective July 1, 2003, through December 31, 2008, any
  176  member of the optional retirement program who has service credit
  177  in the pension plan of the Florida Retirement System for the
  178  period between his or her first eligibility to transfer from the
  179  pension plan to the optional retirement program and the actual
  180  date of transfer may, during employment, transfer to the
  181  optional retirement program a sum representing the present value
  182  of the accumulated benefit obligation under the defined benefit
  183  retirement program for the period of service credit. Upon
  184  transfer, all service credit previously earned under the pension
  185  plan during this period is nullified for purposes of entitlement
  186  to a future benefit under the pension plan.
  187         Section 2. Paragraph (d) of subsection (6) of section
  188  121.055, Florida Statutes, is amended to read:
  189         121.055 Senior Management Service Class.—There is hereby
  190  established a separate class of membership within the Florida
  191  Retirement System to be known as the “Senior Management Service
  192  Class,” which shall become effective February 1, 1987.
  193         (6)
  194         (d) Contributions.—
  195         1.a. Through June 30, 2001, each employer shall contribute
  196  on behalf of each member of the Senior Management Service
  197  Optional Annuity Program an amount equal to the normal cost
  198  portion of the employer retirement contribution which would be
  199  required if the member were a Senior Management Service Class
  200  member of the Florida Retirement System Pension Plan, plus the
  201  portion of the contribution rate required in s. 112.363(8) that
  202  would otherwise be assigned to the Retiree Health Insurance
  203  Subsidy Trust Fund.
  204         b. Effective July 1, 2001, through June 30, 2011, each
  205  employer shall contribute on behalf of each member of the
  206  optional annuity program an amount equal to 12.49 percent of the
  207  employee’s gross monthly compensation.
  208         c. Effective July 1, 2011, through June 30, 2012, each
  209  member of the optional annuity program shall contribute an
  210  amount equal to the employee contribution required under s.
  211  121.71(3). The employer shall contribute on behalf of such
  212  employee an amount equal to the difference between 12.49 percent
  213  of the employee’s gross monthly compensation and the amount
  214  equal to the employee’s required contribution based on the
  215  employee’s gross monthly compensation.
  216         d. Effective July 1, 2012, each member of the optional
  217  annuity program shall contribute an amount equal to the employee
  218  contribution required under s. 121.73. The employer shall
  219  contribute on behalf of such employee an amount equal to the
  220  difference between 9.27 percent of the employee’s gross monthly
  221  compensation and the amount equal to the employee’s required
  222  contribution based on the employee’s gross monthly compensation.
  223         e.d. The department shall deduct an amount approved by the
  224  Legislature to provide for the administration of this program.
  225  Payment of the contributions, including contributions made by
  226  the employee, shall be made by the employer to the department,
  227  which shall forward the contributions to the designated company
  228  or companies contracting for payment of benefits for the member
  229  under the program.
  230         2. Each employer shall contribute on behalf of each member
  231  of the Senior Management Service Optional Annuity Program an
  232  amount equal to the unfunded actuarial accrued liability portion
  233  of the employer contribution which would be required for members
  234  of the Senior Management Service Class in the Florida Retirement
  235  System. This contribution shall be paid to the department for
  236  transfer to the Florida Retirement System Trust Fund.
  237         3. An Optional Annuity Program Trust Fund shall be
  238  established in the State Treasury and administered by the
  239  department to make payments to provider companies on behalf of
  240  the optional annuity program members, and to transfer the
  241  unfunded liability portion of the state optional annuity program
  242  contributions to the Florida Retirement System Trust Fund.
  243         4. Contributions required for social security by each
  244  employer and employee, in the amount required for social
  245  security coverage as now or hereafter may be provided by the
  246  federal Social Security Act shall be maintained for each member
  247  of the Senior Management Service retirement program and are in
  248  addition to the retirement contributions specified in this
  249  paragraph.
  250         5. Each member of the Senior Management Service optional
  251  annuity program may contribute by way of salary reduction or
  252  deduction a percentage amount of the employee’s gross
  253  compensation not to exceed the percentage amount contributed by
  254  the employer to the optional annuity program. Payment of the
  255  employee’s contributions shall be made by the employer to the
  256  department, which shall forward the contributions to the
  257  designated company or companies contracting for payment of
  258  benefits for the member under the program.
  259         Section 3. Paragraph (a) of subsection (4) of section
  260  121.35, Florida Statutes, is amended to read:
  261         121.35 Optional retirement program for the State University
  262  System.—
  263         (4) CONTRIBUTIONS.—
  264         (a)1. Through June 30, 2001, each employer shall contribute
  265  on behalf of each member of the optional retirement program an
  266  amount equal to the normal cost portion of the employer
  267  retirement contribution which would be required if the employee
  268  were a regular member of the Florida Retirement System Pension
  269  Plan, plus the portion of the contribution rate required in s.
  270  112.363(8) that would otherwise be assigned to the Retiree
  271  Health Insurance Subsidy Trust Fund.
  272         2. Effective July 1, 2001, through June 30, 2011, each
  273  employer shall contribute on behalf of each member of the
  274  optional retirement program an amount equal to 10.43 percent of
  275  the employee’s gross monthly compensation.
  276         3. Effective July 1, 2011, through June 30, 2012, each
  277  member of the optional retirement program shall contribute an
  278  amount equal to the employee contribution required in s.
  279  121.71(3). The employer shall contribute on behalf of each such
  280  member an amount equal to the difference between 10.43 percent
  281  of the employee’s gross monthly compensation and the amount
  282  equal to the employee’s required contribution based on the
  283  employee’s gross monthly compensation.
  284         4. Effective July 1, 2012, each member of the optional
  285  retirement program shall contribute an amount equal to the
  286  employee contribution required in s. 121.71(3). The employer
  287  shall contribute on behalf of each such member an amount equal
  288  to the difference between 8.15 percent of the employee’s gross
  289  monthly compensation and the amount equal to the employee’s
  290  required contribution based on the employee’s gross monthly
  291  compensation.
  292         5.4. The payment of the contributions, including
  293  contributions by the employee, shall be made by the employer to
  294  the department, which shall forward the contributions to the
  295  designated company or companies contracting for payment of
  296  benefits for members of the program. However, such contributions
  297  paid on behalf of an employee described in paragraph (3)(c) may
  298  not be forwarded to a company and do not begin to accrue
  299  interest until the employee has executed a contract and notified
  300  the department. The department shall deduct an amount from the
  301  contributions to provide for the administration of this program.
  302         Section 4. Subsection (4) and (5) of section 121.71,
  303  Florida Statutes, are amended to read:
  304         121.71 Uniform rates; process; calculations; levy.—
  305         (4) Required employer retirement contribution rates for
  306  each membership class and subclass of the Florida Retirement
  307  System for both retirement plans are as follows:
  308  
  309  Membership Class               Percentage ofGrossCompensation,EffectiveJuly 1, 2012 2011Percentage ofGrossCompensation,EffectiveJuly 1, 2013 2012
  310                                 
  311  Regular Class                    3.55% 3.28%     3.55% 3.28%   
  312  Special Risk Class              11.01% 10.21%   11.01% 10.21%  
  313  Special Risk Administrative Support Class  3.94% 4.07%     3.94% 4.07%   
  314  Elected Officers’ Class— Legislators, Governor, Lt. Governor, Cabinet Officers, State Attorneys, Public Defenders  6.51% 7.02%     6.51% 7.02%   
  315  Elected Officers’ Class— Justices, Judges  10.02% 9.78%    10.02% 9.78%  
  316  Elected Officers’ Class— County Elected Officers  8.36% 9.27%     8.36% 9.27%   
  317  Senior Management Class          4.84% 4.81%     4.84% 4.81%   
  318  DROP                             4.33% 3.31%     4.33% 3.31%   
  319         (5) In order to address unfunded actuarial liabilities of
  320  the system, the required employer retirement contribution rates
  321  for each membership class and subclass of the Florida Retirement
  322  System for both retirement plans are as follows:
  323  
  324  Membership Class               Percentage ofGrossCompensation,EffectiveJuly 1, 2012 2011Percentage ofGrossCompensation,EffectiveJuly 1,2013 2012
  325                                 
  326  Regular Class                       0.49%        2.02% 2.16%   
  327  Special Risk Class                  2.75%        7.03% 8.21%   
  328  Special Risk Administrative Support Class     0.83%       27.04% 21.40%  
  329  Elected Officers’ Class— Legislators, Governor, Lt. Governor, Cabinet Officers, State Attorneys, Public Defenders     0.88%       27.18% 21.76%  
  330  Elected Officers’ Class— Justices, Judges     0.77%       16.38% 12.86%  
  331  Elected Officers’ Class— County Elected Officers     0.73%       23.01% 22.05%  
  332  Senior Management Service Class     0.32%       11.25% 10.51%  
  333  DROP                                0.00%        6.21% 6.36%   
  334         Section 5. Subsection (4) of section 121.72, Florida
  335  Statutes, is amended, and subsection (5) is added to that
  336  section, to read:
  337         121.72 Allocations to investment plan member accounts;
  338  percentage amounts.—
  339         (4) Effective July 1, 2002, through June 30, 2012,
  340  allocations from the Florida Retirement System Contributions
  341  Clearing Trust Fund to investment plan member accounts are as
  342  follows:
  343  Membership Class                      Percentage of Gross Compensation
  344                                        
  345  Regular Class                                     9.00%             
  346  Special Risk Class                                20.00%            
  347  Special Risk Administrative Support Class            11.35%            
  348  Elected Officers’ Class— Legislators, Governor, Lt. Governor, Cabinet Officers, State Attorneys, Public Defenders            13.40%            
  349  Elected Officers’ Class— Justices, Judges            18.90%            
  350  Elected Officers’ Class— County Elected Officers            16.20%            
  351  Senior Management Service Class                   10.95%            
  352         (5) Effective July 1, 2012, allocations from the Florida
  353  Retirement System Contributions Clearing Trust Fund to
  354  investment plan member accounts are as follows:
  355  
  356  Membership Class                               Percentage of Gross Compensation
  357                                                 
  358  Regular Class                                       6.30%      
  359  Special Risk Class                                  14.00%     
  360  Special Risk Administrative Support Class           7.95%      
  361  Elected Officers’ Class—Legislators, Governor,Lt. Governor, Cabinet Officers,State Attorneys, Public Defenders     9.38%      
  362  Elected Officers’ Class—Justices, Judges           13.23%     
  363  Elected Officers’ Class—County Elected Officers     11.34%     
  364  Senior Management Service Class                     7.67%      
  365                                                                 
  366         Section 6. Paragraph (a) of subsection (4) of section
  367  1012.875, Florida Statutes, is amended to read:
  368         1012.875 State Community College System Optional Retirement
  369  Program.—Each Florida College System institution may implement
  370  an optional retirement program, if such program is established
  371  therefor pursuant to s. 1001.64(20), under which annuity or
  372  other contracts providing retirement and death benefits may be
  373  purchased by, and on behalf of, eligible employees who
  374  participate in the program, in accordance with s. 403(b) of the
  375  Internal Revenue Code. Except as otherwise provided herein, this
  376  retirement program, which shall be known as the State Community
  377  College System Optional Retirement Program, may be implemented
  378  and administered only by an individual Florida College System
  379  institution or by a consortium of Florida College System
  380  institutions.
  381         (4)(a)1. Through June 30, 2011, each college must
  382  contribute on behalf of each program member an amount equal to
  383  10.43 percent of the employee’s gross monthly compensation.
  384         2. Effective July 1, 2011, through June 30, 2012, each
  385  member shall contribute an amount equal to the employee
  386  contribution required under s. 121.71(3). The employer shall
  387  contribute on behalf of each program member an amount equal to
  388  the difference between 10.43 percent of the employee’s gross
  389  monthly compensation and the employee’s required contribution
  390  based on the employee’s gross monthly compensation.
  391         3. Effective July 1, 2012, each member shall contribute an
  392  amount equal to the employee contribution required under s.
  393  121.71(3). The employer shall contribute on behalf of each
  394  program member an amount equal to the difference between 8.15
  395  percent of the employee’s gross monthly compensation and the
  396  employee’s required contribution based on the employee’s gross
  397  monthly compensation.
  398         4.3. The college shall deduct an amount approved by the
  399  district board of trustees of the college to provide for the
  400  administration of the optional retirement program. Payment of
  401  this contribution must be made directly by the college or
  402  through the program administrator to the designated company
  403  contracting for payment of benefits to the program member.
  404         Section 7. The Legislature finds that a proper and
  405  legitimate state purpose is served when employees and retirees
  406  of the state and its political subdivisions, and the dependents,
  407  survivors, and beneficiaries of such employees and retirees, are
  408  extended the basic protections afforded by governmental
  409  retirement systems. These persons must be provided benefits that
  410  are fair and adequate and that are managed, administered, and
  411  funded in an actuarially sound manner, as required by s. 14,
  412  Article X of the State Constitution and part VII of chapter 112,
  413  Florida Statutes. Therefore, the Legislature determines and
  414  declares that this act fulfills an important state interest.
  415         Section 8. This act shall take effect July 1, 2012.