Senate Bill sb0002e3

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    CS for SB 2                                    Third Engrossed



  1                      A bill to be entitled

  2         An act relating to retirement; amending s.

  3         121.053, F.S.; authorizing elected officers

  4         participating in DROP to terminate

  5         participation in DROP and enroll in a subclass

  6         of the Elected Officers' Class; amending s.

  7         121.091, F.S.; increasing the time for

  8         participation in the Deferred Retirement Option

  9         Program for members of the Elected Officers'

10         Class of the Florida Retirement System;

11         providing that elected officers are not subject

12         to termination limitations; amending s.

13         122.0515, F.S., relating to special risk

14         membership; revising criteria for members

15         inclusion in the Elected Officers' Class;

16         providing requirements for the appointment of

17         the executive director of the State Board of

18         Administration; providing a declaration of an

19         important state interest; providing for a

20         one-time cost-of-living increase for certain

21         retired members of the Florida Retirement

22         System who have service credit earned between

23         September 30, 1978, and January 1, 1993, in the

24         Special Risk Class of the Florida Retirement

25         System; providing an effective date.

26

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

28

29         Section 1.  Paragraph (b) of subsection (1) of section

30  121.053, Florida Statutes, is amended to read:

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    CS for SB 2                                    Third Engrossed



  1         121.053  Participation in the Elected Officers' Class

  2  for retired members.--

  3         (1)

  4         (b)  Any retired member of the Florida Retirement

  5  System, or any existing system as defined in s. 121.021(2),

  6  who, on or after July 1, 1990, is serving in, or is elected or

  7  appointed to, an elective office covered by the Elected

  8  Officers' Class shall be enrolled in the appropriate subclass

  9  of the Elected Officers' Class of the Florida Retirement

10  System, and applicable contributions shall be paid into the

11  Florida Retirement System Trust Fund as provided in s.

12  121.052(7).  Pursuant thereto:

13         1.  Any such retired member shall be eligible to

14  continue to receive retirement benefits as well as

15  compensation for the elected officer service for as long as he

16  or she remains in an elective office covered by the Elected

17  Officers' Class.

18         2.  If any such member serves in an elective office

19  covered by the Elected Officers' Class and becomes vested

20  under that class, he or she shall be entitled to receive an

21  additional retirement benefit for such elected officer

22  service.

23         3.  Such member shall be entitled to purchase

24  additional retirement credit in the Elected Officers' Class

25  for any postretirement service performed in an elected

26  position eligible for the Elected Officers' Class prior to

27  July 1, 1990, or in the Regular Class for any postretirement

28  service performed in any other regularly established position

29  prior to July 1, 1991, by paying the applicable Elected

30  Officers' Class or Regular Class employee and employer

31  contributions for the period being claimed, plus 4 percent


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    CS for SB 2                                    Third Engrossed



  1  interest compounded annually from the first year of service

  2  claimed until July 1, 1975, and 6.5 percent interest

  3  compounded thereafter, until full payment is made to the

  4  Florida Retirement System Trust Fund. The contribution for

  5  postretirement Regular Class service between July 1, 1985, and

  6  July 1, 1991, for which the reemployed retiree contribution

  7  was paid, shall be the difference between such contribution

  8  and the total applicable contribution for the period being

  9  claimed, plus interest. The employer of such member may pay

10  the applicable employer contribution in lieu of the member. If

11  a member does not wish to claim credit for all of the

12  postretirement service for which he or she is eligible, the

13  service the member claims must be the most recent service.

14         4.  Creditable service for which credit was received,

15  or which remained unclaimed, at retirement may not be claimed

16  or applied toward service credit earned following renewed

17  membership. However, service earned in accordance with the

18  renewed membership provisions in s. 121.122 may be used in

19  conjunction with creditable service earned under this

20  paragraph, provided applicable vesting requirements and other

21  existing statutory conditions required by this chapter are

22  met.

23         5.  Any elected officer who is a participating member

24  of DROP may terminate participation at any time during the

25  60-month DROP participation period and elect to enroll in the

26  appropriate subclass of the Elected Officers' Class, including

27  participating in the Senior Management Service Class,

28  effective the first day of the following month.

29         Section 2.  Paragraph (b) of subsection (13) of section

30  121.091, Florida Statutes, is amended to read:

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    CS for SB 2                                    Third Engrossed



  1         121.091  Benefits payable under the system.--Benefits

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

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

  4  begun participation in the Deferred Retirement Option Program

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

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

  7  department may cancel an application for retirement benefits

  8  when the member or beneficiary fails to timely provide the

  9  information and documents required by this chapter and the

10  department's rules. The department shall adopt rules

11  establishing procedures for application for retirement

12  benefits and for the cancellation of such application when the

13  required information or documents are not received.

14         (13)  DEFERRED RETIREMENT OPTION PROGRAM.--In general,

15  and subject to the provisions of this section, the Deferred

16  Retirement Option Program, hereinafter referred to as the

17  DROP, is a program under which an eligible member of the

18  Florida  Retirement System may elect to participate, deferring

19  receipt of retirement benefits while continuing employment

20  with his or her Florida Retirement System employer.  The

21  deferred monthly benefits shall accrue in the System Trust

22  Fund on behalf of the participant, plus interest compounded

23  monthly, for the specified period of the DROP participation,

24  as provided in paragraph (c).  Upon termination of employment,

25  the participant shall receive the total DROP benefits and

26  begin to receive the previously determined normal retirement

27  benefits. Participation in the DROP does not guarantee

28  employment for the specified period of DROP.

29         (b)  Participation in the DROP.--

30         1.  An eligible member may elect to participate in the

31  DROP for a period not to exceed a maximum of 60 calendar


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    CS for SB 2                                    Third Engrossed



  1  months immediately following the date on which the member

  2  first reaches his or her normal retirement date or the date to

  3  which he or she is eligible to defer his or her election to

  4  participate as provided in subparagraph (a)2. However, a

  5  member who has reached normal retirement date prior to the

  6  effective date of the DROP shall be eligible to participate in

  7  the DROP for a period of time not to exceed 60 calendar months

  8  immediately following the effective date of the DROP, except a

  9  member of the Special Risk Class who has reached normal

10  retirement date prior to the effective date of the DROP and

11  whose total accrued value exceeds 75 percent of average final

12  compensation as of his or her effective date of retirement

13  shall be eligible to participate in the DROP for no more than

14  36 calendar months immediately following the effective date of

15  the DROP.

16         2.  Upon deciding to participate in the DROP, the

17  member shall submit, on forms required by the division:

18         a.  A written election to participate in the DROP;

19         b.  Selection of the DROP participation and termination

20  dates, which satisfy the limitations stated in paragraph (a)

21  and subparagraph 1. Such termination date shall be in a

22  binding letter of resignation with the employer, establishing

23  a deferred termination date. The member may change the

24  termination date within the limitations of subparagraph 1.,

25  but only with the written approval of his or her employer;

26         c.  A properly completed DROP application for service

27  retirement as provided in this section; and

28         d.  Any other information required by the division.

29         3.  The DROP participant shall be a retiree under the

30  Florida Retirement System for all purposes, except for

31  paragraph (5)(f) and subsection (9) and ss. 112.3173, 112.363,


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    CS for SB 2                                    Third Engrossed



  1  121.053, and 121.122. However, participation in the DROP does

  2  not alter the participant's employment status and such

  3  employee shall not be deemed retired from employment until his

  4  or her deferred resignation is effective and termination

  5  occurs as provided in s. 121.021(39).

  6         4.  Elected officers shall be eligible to participate

  7  in the DROP subject to the following:

  8         a.  An elected officer who reaches normal retirement

  9  date during a term of office may defer the election to

10  participate in the DROP until the next succeeding term in that

11  office. Such elected officer who exercises this option may

12  participate in the DROP for up to 60 calendar months or a

13  period of no longer than such succeeding term of office,

14  whichever is less.

15         b.  An elected or a nonelected participant may run for

16  a term of office while participating in DROP and, if elected,

17  extend the DROP termination date accordingly, except, however,

18  if such additional term of office exceeds the 60-month

19  limitation established in subparagraph 1., and the officer

20  does not resign from office within such 60-month limitation,

21  the retirement and the participant's DROP shall be null and

22  void as provided in sub-subparagraph (c)5.d.

23         c.  An elected officer who is dually employed and

24  elects to participate in DROP shall be required to satisfy the

25  definition of termination within the 60-month limitation

26  period as provided in subparagraph 1. for the nonelected

27  position and may continue employment as an elected officer as

28  provided in s. 121.053. The elected officer will be enrolled

29  as a renewed member in the Elected Officers' Class or the

30  Regular Class, as provided in ss. 121.053 and 121.22, on the

31  first day of the month after termination of employment in the


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    CS for SB 2                                    Third Engrossed



  1  nonelected position and termination of DROP. Distribution of

  2  the DROP benefits shall be made as provided in paragraph (c).

  3         d.  An elected officer who is elected or appointed to

  4  an elective office is not subject to termination limitations

  5  as provided in chapter 121.

  6         Section 3.  Effective October 1, 2001, subsection (2)

  7  of section 121.0515, Florida Statutes, is amended to read:

  8         121.0515  Special risk membership.--

  9         (2)  CRITERIA.--A member, to be designated as a special

10  risk member, must meet the following criteria:

11         (a)  The member must be employed as a law enforcement

12  officer and be certified, or required to be certified, in

13  compliance with s. 943.1395; however, sheriffs and elected

14  police chiefs shall be excluded from meeting the certification

15  requirements of this paragraph.  In addition, the member's

16  duties and responsibilities must include the pursuit,

17  apprehension, and arrest of law violators or suspected law

18  violators; or the member must be an active member of a bomb

19  disposal unit whose primary responsibility is the location,

20  handling, and disposal of explosive devices; or the member

21  must be the supervisor or command officer of a member or

22  members who have such responsibilities; provided, however,

23  administrative support personnel, including, but not limited

24  to, those whose primary duties and responsibilities are in

25  accounting, purchasing, legal, and personnel, shall not be

26  included;

27         (b)  The member must be employed as a firefighter and

28  be certified, or required to be certified, in compliance with

29  s. 633.35 and be employed solely within the fire department of

30  a local government the employer or an agency of state

31  government with firefighting responsibilities.  In addition,


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    CS for SB 2                                    Third Engrossed



  1  the member's duties and responsibilities must include

  2  on-the-scene fighting of fires, fire prevention, or

  3  firefighter training; or direct supervision of firefighting

  4  units, fire prevention, or firefighter training; or aerial

  5  firefighting surveillance performed by fixed-wing pilots

  6  employed by the Division of Forestry of the Department of

  7  Agriculture and Consumer Services; or the member must be the

  8  supervisor or command officer of a member or members who have

  9  such responsibilities; provided, however, administrative

10  support personnel, including, but not limited to, those whose

11  primary duties and responsibilities are in accounting,

12  purchasing, legal, and personnel, shall not be included;

13         (c)  The member must be employed as a correctional

14  officer and be certified, or required to be certified, in

15  compliance with s. 943.1395.  In addition, the member's

16  primary duties and responsibilities must be the custody, and

17  physical restraint when necessary, of prisoners or inmates

18  within a prison, jail, or other criminal detention facility,

19  or while on work detail outside the facility, or while being

20  transported; or the member must be the supervisor or command

21  officer of a member or members who have such responsibilities;

22  provided, however, administrative support personnel,

23  including, but not limited to, those whose primary duties and

24  responsibilities are in accounting, purchasing, legal, and

25  personnel, shall not be included; however, wardens and

26  assistant wardens, as defined by rule, shall participate in

27  the Special Risk Class;

28         (d)  The member must be employed by a licensed Advance

29  Life Support (ALS) or Basic Life Support (BLS) employer as an

30  emergency medical technician or a paramedic and be certified

31  in compliance with s. 401.27.  In addition, the member's


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    CS for SB 2                                    Third Engrossed



  1  primary duties and responsibilities must include on-the-scene

  2  emergency medical care or direct supervision of emergency

  3  medical technicians or paramedics, or the member must be the

  4  supervisor or command officer of one or more members who have

  5  such responsibility.  However, administrative support

  6  personnel, including, but not limited to, those whose primary

  7  responsibilities are in accounting, purchasing, legal, and

  8  personnel, shall not be included;

  9         (e)  The member must be employed as a community-based

10  correctional probation officer and be certified, or required

11  to be certified, in compliance with s. 943.1395.  In addition,

12  the member's primary duties and responsibilities must be the

13  supervised custody, surveillance, control, investigation, and

14  counseling of assigned inmates, probationers, parolees, or

15  community controllees within the community; or the member must

16  be the supervisor of a member or members who have such

17  responsibilities. Administrative support personnel, including,

18  but not limited to, those whose primary duties and

19  responsibilities are in accounting, purchasing, legal

20  services, and personnel management, shall not be included;

21  however, probation and parole circuit and deputy circuit

22  administrators shall participate in the Special Risk Class; or

23         (f)  The member must be employed in one of the

24  following classes and must spend at least 75 percent of his or

25  her time performing duties which involve contact with patients

26  or inmates in a correctional or forensic facility or

27  institution:

28         1.  Dietitian (class codes 5203 and 5204).

29         2.  Public health nutrition consultant (class code

30  5224).

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    CS for SB 2                                    Third Engrossed



  1         3.  Psychological specialist (class codes 5230 and

  2  5231).

  3         4.  Psychologist (class code 5234).

  4         5.  Senior psychologist (class codes 5237 and 5238).

  5         6.  Regional mental health consultant (class code

  6  5240).

  7         7.  Psychological Services Director--DCF (class code

  8  5242).

  9         8.  Pharmacist (class codes 5245 and 5246).

10         9.  Senior pharmacist (class codes 5248 and 5249).

11         10.  Dentist (class code 5266).

12         11.  Senior dentist (class code 5269).

13         12.  Registered nurse (class codes 5290 and 5291).

14         13.  Senior registered nurse (class codes 5292 and

15  5293).

16         14.  Registered nurse specialist (class codes 5294 and

17  5295).

18         15.  Clinical associate (class codes 5298 and 5299).

19         16.  Advanced registered nurse practitioner (class

20  codes 5297 and 5300).

21         17.  Advanced registered nurse practitioner specialist

22  (class codes 5304 and 5305).

23         18.  Registered nurse supervisor (class codes 5306 and

24  5307).

25         19.  Senior registered nurse supervisor (class codes

26  5308 and 5309).

27         20.  Registered nursing consultant (class codes 5312

28  and 5313).

29         21.  Quality management program supervisor (class code

30  5314).

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    CS for SB 2                                    Third Engrossed



  1         22.  Executive nursing director (class codes 5320 and

  2  5321).

  3         23.  Speech and hearing therapist (class code 5406); or

  4         24.  Pharmacy manager (class code 5251).

  5         Section 4.  Effective October 1, 2001, subsection (1)

  6  of section 121.055, Florida Statutes, is amended to read:

  7         121.055  Senior Management Service Class.--There is

  8  hereby established a separate class of membership within the

  9  Florida Retirement System to be known as the "Senior

10  Management Service Class," which shall become effective

11  February 1, 1987.

12         (1)(a)  Participation in the Senior Management Service

13  Class shall be limited to and compulsory for any member of the

14  Florida Retirement System who holds a position in the Senior

15  Management Service of the State of Florida, established by

16  part III of chapter 110, unless such member elects, within the

17  time specified herein, to participate in the Senior Management

18  Service Optional Annuity Program as established in subsection

19  (6).

20         (b)1.  Except as provided in subparagraph 2., effective

21  January 1, 1990, participation in the Senior Management

22  Service Class shall be compulsory for the president of each

23  community college, the manager of each participating city or

24  county, and all appointed district school superintendents.

25  Effective January 1, 1994, additional positions may be

26  designated for inclusion in the Senior Management Service

27  Class of the Florida Retirement System, provided that:

28         a.  Positions to be included in the class shall be

29  designated by the local agency employer.  Notice of intent to

30  designate positions for inclusion in the class shall be

31  published once a week for 2 consecutive weeks in a newspaper


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    CS for SB 2                                    Third Engrossed



  1  of general circulation published in the county or counties

  2  affected, as provided in chapter 50.

  3         b.  Up to 10 nonelective full-time positions may be

  4  designated for each local agency employer reporting to the

  5  Department of Management Services; for local agencies with 100

  6  or more regularly established positions, additional

  7  nonelective full-time positions may be designated, not to

  8  exceed 1 percent of the regularly established positions within

  9  the agency.

10         c.  Each position added to the class must be a

11  managerial or policymaking position filled by an employee who

12  is not subject to continuing contract and serves at the

13  pleasure of the local agency employer without civil service

14  protection, and who:

15         (I)  Heads an organizational unit; or

16         (II)  Has responsibility to effect or recommend

17  personnel, budget, expenditure, or policy decisions in his or

18  her areas of responsibility.

19         2.  In lieu of participation in the Senior Management

20  Service Class, members of the Senior Management Service Class

21  pursuant to the provisions of subparagraph 1. may withdraw

22  from the Florida Retirement System altogether. The decision to

23  withdraw from the Florida Retirement System shall be

24  irrevocable for as long as the employee holds such a position.

25  Any service creditable under the Senior Management Service

26  Class shall be retained after the member withdraws from the

27  Florida Retirement System; however, additional service credit

28  in the Senior Management Service Class shall not be earned

29  after such withdrawal.  Such members shall not be eligible to

30  participate in the Senior Management Service Optional Annuity

31  Program.


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    CS for SB 2                                    Third Engrossed



  1         (c)1.  Effective January 1, 1990, participation in the

  2  Senior Management Service Class shall be compulsory for up to

  3  75 nonelective positions at the level of committee staff

  4  director or higher or equivalent managerial or policymaking

  5  positions within the House of Representatives, as selected by

  6  the Speaker of the House of Representatives, up to 50

  7  nonelective positions at the level of committee staff director

  8  or higher or equivalent managerial or policymaking positions

  9  within the Senate, as selected by the President of the Senate,

10  all staff directors of joint committees and service offices of

11  the Legislature, the Auditor General and up to 9 managerial or

12  policymaking positions within his or her office as selected by

13  the Auditor General, and the executive director of the

14  Commission on Ethics.

15         2.  Participation in this class shall be compulsory,

16  except as provided in subparagraph 3., for any legislative

17  employee who holds a position designated for coverage in the

18  Senior Management Service Class, and such participation shall

19  continue until the employee terminates employment in a covered

20  position.

21         3.  In lieu of participation in the Senior Management

22  Service Class, at the discretion of the President of the

23  Senate and the Speaker of the House of Representatives, such

24  members may participate in the Senior Management Service

25  Optional Annuity Program as established in subsection (6).

26         (d)  Effective January 1, 1991, participation in the

27  Senior Management Service Class shall be compulsory for any

28  member of the Florida Retirement System in a position that has

29  been designated eligible for inclusion in the Executive

30  Service of the State University System or who holds a position

31  as president of a state university, unless such member elects,


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    CS for SB 2                                    Third Engrossed



  1  pursuant to s. 121.35, to participate in the optional

  2  retirement program.

  3         (e)  Effective January 1, 1991, participation in the

  4  Senior Management Service Class shall be compulsory for the

  5  number of senior managers who have policymaking authority with

  6  the State Board of Administration, as determined by the

  7  Governor, Treasurer, and Comptroller acting as the State Board

  8  of Administration, unless such member elects to participate in

  9  the Senior Management Service Optional Annuity Program as

10  established in subsection (6) in lieu of participation in the

11  Senior Management Service Class. Such election shall be made

12  in writing and filed with the division and the personnel

13  officer of the State Board of Administration within 90 days

14  after becoming eligible for membership in the Senior

15  Management Service Class.

16         (f)  Effective July 1, 1997:

17         1.  Any elected state officer eligible for membership

18  in the Elected Officers' Class under s. 121.052(2)(a), (b), or

19  (c) who elects membership in the Senior Management Service

20  Class under s. 121.052(3)(c) may, within 6 months after

21  assuming office or within 6 months after this act becomes a

22  law for serving elected state officers, elect to participate

23  in the Senior Management Service Optional Annuity Program, as

24  provided in subsection (6), in lieu of membership in the

25  Senior Management Service Class.

26         2.  Any elected county officer eligible for membership

27  in the Elected Officers' Class under s. 121.052(2)(d) who

28  elects membership in the Senior Management Service Class under

29  s. 121.052(3)(c) may, within 6 months after assuming office,

30  or within 6 months after this act becomes a law for serving

31  elected county officers, elect to participate in a lifetime


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    CS for SB 2                                    Third Engrossed



  1  monthly annuity program, as provided in subparagraph (b)2., in

  2  lieu of membership in the Senior Management Service Class.

  3         (g)  Effective July 1, 1996, participation in the

  4  Senior Management Service Class shall be compulsory for any

  5  member of the Florida Retirement System employed with the

  6  Department of Military Affairs in the positions of the

  7  Adjutant General, Assistant Adjutant General-Army, Assistant

  8  Adjutant General-Air, State Quartermaster, Director of

  9  Military Personnel, Director of Administration, and additional

10  directors as designated by the agency head, not to exceed a

11  total of 10 positions.  In lieu of participation in the Senior

12  Management Service Class, such members may participate in the

13  Senior Management Service Optional Annuity Program as

14  established in subsection (6).

15         (h)1.  Except as provided in subparagraph 3., effective

16  January 1, 1994, participation in the Senior Management

17  Service Class shall be compulsory for the State Courts

18  Administrator and the Deputy State Courts Administrators, the

19  Clerk of the Supreme Court, the Marshal of the Supreme Court,

20  the Executive Director of the Justice Administrative

21  Commission, the Capital Collateral Regional Counsels, the

22  clerks of the district courts of appeals, the marshals of the

23  district courts of appeals, and the trial court administrator

24  in each judicial circuit. Effective January 1, 1994,

25  additional positions in the offices of the state attorney and

26  public defender in each judicial circuit may be designated for

27  inclusion in the Senior Management Service Class of the

28  Florida Retirement System, provided that:

29         a.  Positions to be included in the class shall be

30  designated by the state attorney or public defender, as

31  appropriate.  Notice of intent to designate positions for


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    CS for SB 2                                    Third Engrossed



  1  inclusion in the class shall be published once a week for 2

  2  consecutive weeks in a newspaper of general circulation

  3  published in the county or counties affected, as provided in

  4  chapter 50.

  5         b.  One nonelective full-time position may be

  6  designated for each state attorney and public defender

  7  reporting to the Department of Management Services; for

  8  agencies with 200 or more regularly established positions

  9  under the state attorney or public defender, additional

10  nonelective full-time positions may be designated, not to

11  exceed 0.5 percent of the regularly established positions

12  within the agency.

13         c.  Each position added to the class must be a

14  managerial or policymaking position filled by an employee who

15  serves at the pleasure of the state attorney or public

16  defender without civil service protection, and who:

17         (I)  Heads an organizational unit; or

18         (II)  Has responsibility to effect or recommend

19  personnel, budget, expenditure, or policy decisions in his or

20  her areas of responsibility.

21         2.  Participation in this class shall be compulsory,

22  except as provided in subparagraph 3., for any judicial

23  employee who holds a position designated for coverage in the

24  Senior Management Service Class, and such participation shall

25  continue until the employee terminates employment in a covered

26  position. Effective January 1, 2001, participation in this

27  class is compulsory for assistant state attorneys, assistant

28  statewide prosecutors, assistant public defenders, and

29  assistant capital collateral regional counsels. Effective

30  January 1, 2002, participation in this class is compulsory for

31  assistant attorneys general.


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    CS for SB 2                                    Third Engrossed



  1         3.  In lieu of participation in the Senior Management

  2  Service Class, such members, excluding assistant state

  3  attorneys, assistant public defenders, assistant statewide

  4  prosecutors, assistant attorneys general, and assistant

  5  capital collateral regional counsels, may participate in the

  6  Senior Management Service Optional Annuity Program as

  7  established in subsection (6).

  8         (i)1.  Except as provided in subparagraph 2., effective

  9  July 1, 1999, participation in the Senior Management Service

10  Class is compulsory for any member of the Florida Retirement

11  System who is employed as a judge of compensation claims with

12  the Office of the Judges of Compensation Claims within the

13  Department of Labor and Employment Security.

14         2.  In lieu of participating in the Senior Management

15  Service Class, a judge of compensation claims may participate

16  in the Senior Management Service Optional Annuity Program

17  established under subsection (6).

18         (j)  Except as may otherwise be provided, any member of

19  the Senior Management Service Class may purchase additional

20  retirement credit in such class for creditable service within

21  the purview of the Senior Management Service Class retroactive

22  to February 1, 1987, and may upgrade retirement credit for

23  such service, to the extent of 2 percent of the member's

24  average monthly compensation as specified in paragraph (4)(d)

25  for such service. Contributions for upgrading the additional

26  Senior Management Service credit pursuant to this paragraph

27  shall be equal to the difference in the contributions paid and

28  the Senior Management Service Class contribution rate as a

29  percentage of gross salary in effect for the period being

30  claimed, plus interest thereon at the rate of 6.5 percent a

31  year, compounded annually until the date of payment. This


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    CS for SB 2                                    Third Engrossed



  1  service credit may be purchased by the employer on behalf of

  2  the member.

  3         Section 5.  Subsection (1), paragraph (a) of subsection

  4  (2), paragraph (e) of subsection (4), paragraph (b) of

  5  subsection (8), and paragraphs (a) and (b) of subsection (9)

  6  of section 121.4501, Florida Statutes, are amended, and

  7  paragraph (f) is added to subsection (9) of that section, to

  8  read:

  9         121.4501  Public Employee Optional Retirement

10  Program.--

11         (1)  The Trustees of the State Board of Administration

12  shall establish an optional defined contribution retirement

13  program for members of the Florida Retirement System under

14  which retirement benefits will be provided for eligible

15  employees who elect to participate in the program. The

16  benefits to be provided for or on behalf of participants in

17  such optional retirement program shall be provided through

18  employee-directed investments, in accordance with s. 401(a) of

19  the Internal Revenue Code and its related regulations. The

20  employers shall contribute, as provided in this section and s.

21  121.571, to the Public Employee Optional Retirement Program

22  Trust Fund toward the funding of such optional benefits.

23         (2)  DEFINITIONS.--As used in this section, the term:

24         (a)  "Approved provider" or "provider" means a private

25  sector company that is selected and approved by the state

26  board to offer one or more investment products or services to

27  the Public Employee Optional Retirement Program. The term

28  includes a bundled provider that offers participants a range

29  of individually allocated or unallocated investment products

30  and may offer a range of administrative and customer services,

31  which may include accounting and administration of individual


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    CS for SB 2                                    Third Engrossed



  1  participant benefits and contributions; individual participant

  2  recordkeeping; asset purchase, control, and safekeeping;

  3  direct execution of the participant's instructions as to asset

  4  and contribution allocation; calculation of daily net asset

  5  values; direct access to participant account information;

  6  periodic reporting to participants, at least quarterly, on

  7  account balances and transactions; guidance, advice, and

  8  allocation services directly relating to its own investment

  9  options or products, but only if the bundled provider complies

10  with the standard of care of s. 404(a)(1)(A-B) of the Employee

11  Retirement Income Security Act of 1974 (ERISA) and if

12  providing such guidance, advice, or allocation services does

13  not constitute a prohibited transaction under s. 4975(c)(1) of

14  the Internal Revenue Code or s. 406 of ERISA, notwithstanding

15  that such prohibited transaction provisions do not apply to

16  the optional retirement program; a broad array of distribution

17  options; asset allocation; and retirement counseling and

18  education. Private sector companies include investment

19  management companies, insurance companies, depositories, and

20  mutual fund companies.

21         (4)  PARTICIPATION; ENROLLMENT.--

22         (e)  After the period during which an eligible employee

23  had the choice to elect the defined benefit program or the

24  Public Employee Optional Retirement Program, the employee

25  shall have one opportunity, at the employee's discretion, to

26  choose to move from the defined benefit program to the Public

27  Employee Optional Retirement Program or from the Public

28  Employee Optional Retirement Program to the defined benefit

29  program. This paragraph shall be contingent upon approval from

30  the Internal Revenue Service for including the choice

31


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    CS for SB 2                                    Third Engrossed



  1  described herein within the programs offered by the Florida

  2  Retirement System.

  3         1.  If the employee chooses to move to the Public

  4  Employee Optional Retirement Program, the applicable

  5  provisions of this section shall govern the transfer.

  6         2.  If the employee chooses to move to the defined

  7  benefit program, the employee must transfer from his or her

  8  Public Employee Optional Retirement Program account and from

  9  other employee moneys as necessary, a sum representing the

10  present value of that employee's accumulated benefit

11  obligation immediately following the time of such movement,

12  determined assuming that attained service equals the sum of

13  service in the defined benefit program and service in the

14  Public Employee Optional Retirement Program all contributions

15  that would have been made to the defined benefit plan for that

16  employee and the actual return that would have been earned on

17  those contributions had they been invested in the defined

18  benefit program. Benefit commencement occurs on the first date

19  the employee would become eligible for unreduced benefits,

20  using the discount rate and other relevant actuarial

21  assumptions that were used to value the Florida Retirement

22  System defined benefit plan liabilities in the most recent

23  actuarial valuation. For any employee who, at the time of the

24  second election, already maintains an accrued benefit amount

25  in the defined benefit plan, the then-present value of such

26  accrued benefit shall be deemed part of the required transfer

27  amount described in this subparagraph. The division shall

28  ensure that the transfer sum is prepared using a formula and

29  methodology certified by an enrolled actuary.

30         3.  Notwithstanding subparagraph 2., an employee who

31  chooses to move to the defined benefit program and who became


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    CS for SB 2                                    Third Engrossed



  1  eligible to participate in the Public Employee Optional

  2  Retirement Program by reason of employment in a regularly

  3  established position with a state employer after June 1, 2002;

  4  a district school board employer after September 1, 2002; or a

  5  local employer after December 1, 2002, must transfer from his

  6  or her Public Employee Optional Retirement Program account

  7  and, from other employee moneys as necessary, a sum

  8  representing that employee's actuarial accrued liability.

  9         4.  Employees' ability to transfer from the Florida

10  Retirement System defined benefit program to the Public

11  Employee Optional Retirement Program pursuant to paragraphs

12  (a) through (d), and the ability for current employees to have

13  an option to later transfer back into the defined benefit

14  program under subparagraph 2., shall be deemed a significant

15  system amendment. Pursuant to s. 121.031(4), any such

16  resulting unfunded liability arising from actual original

17  transfers from the defined benefit program to the optional

18  program shall be amortized within 30 plan years as a separate

19  unfunded actuarial base independent of the reserve

20  stabilization mechanism defined in s. 121.031(3)(f). For the

21  first 25 years, no direct amortization payment shall be

22  calculated for this base. During this 25-year period, such

23  separate base shall be used to offset the impact of employees

24  exercising their second program election under this paragraph.

25  It is the legislative intent that the actuarial funded status

26  of the Florida Retirement System defined benefit plan is

27  neither beneficially nor adversely impacted by such second

28  program elections in any significant manner, after due

29  recognition of the separate unfunded actuarial base. Following

30  this initial 25-year period, any remaining balance of the

31


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    CS for SB 2                                    Third Engrossed



  1  original separate base shall be amortized over the remaining 5

  2  years of the required 30-year amortization period.

  3         (8)  ADMINISTRATION OF PROGRAM.--

  4         (b)1.  The state board shall select and contract with

  5  one third-party administrator to provide administrative

  6  services if those services cannot be competitively and

  7  contractually provided by the Division of Retirement within

  8  the Department of Management Services. With the approval of

  9  the state board, the third-party administrator may subcontract

10  with other organizations or individuals to provide components

11  of the administrative services. As a cost of administration,

12  the board may compensate any such contractor for its services,

13  in accordance with the terms of the contract, as is deemed

14  necessary or proper by the board. The third-party

15  administrator may not be an approved provider or be affiliated

16  with an approved provider.

17         2.  These administrative services may include, but are

18  not limited to, enrollment of eligible employees, collection

19  of employer contributions, disbursement of such contributions

20  to approved providers in accordance with the allocation

21  directions of participants; services relating to consolidated

22  billing; individual and collective recordkeeping and

23  accounting; asset purchase, control, and safekeeping; and

24  direct disbursement of funds to and from the third-party

25  administrator, the division, the board, employers,

26  participants, approved providers, and beneficiaries. This

27  section does not prevent or prohibit a bundled provider from

28  providing any administrative or customer service, including

29  accounting and administration of individual participant

30  benefits and contributions; individual participant

31  recordkeeping; asset purchase, control, and safekeeping;


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    CS for SB 2                                    Third Engrossed



  1  direct execution of the participant's instructions as to asset

  2  and contribution allocation; calculation of daily net asset

  3  values; direct access to participant account information; or

  4  periodic reporting to participants, at least quarterly, on

  5  account balances and transactions, if these services are

  6  authorized by the board as part of the contract.

  7         3.  The state board shall select and contract with one

  8  or more organizations to provide educational services. With

  9  approval of the board, the organizations may subcontract with

10  other organizations or individuals to provide components of

11  the educational services. As a cost of administration, the

12  board may compensate any such contractor for its services in

13  accordance with the terms of the contract, as is deemed

14  necessary or proper by the board. The education organization

15  may not be an approved provider or be affiliated with an

16  approved provider.

17         4.  Educational services shall be designed by the board

18  and department to assist employers, eligible employees,

19  participants, and beneficiaries in order to maintain

20  compliance with United States Department of Labor regulations

21  under s. 404(c) of the Employee Retirement Income Security Act

22  of 1974 and to assist employees in their choice of defined

23  benefit or defined contribution retirement alternatives.

24  Educational services include, but are not limited to,

25  disseminating educational materials; providing retirement

26  planning education; explaining the differences between the

27  defined benefit retirement plan and the defined contribution

28  retirement plan; and offering financial planning guidance on

29  matters such as investment diversification, investment risks,

30  investment costs, and asset allocation. An approved provider

31  may also provide educational information, including retirement


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    CS for SB 2                                    Third Engrossed



  1  planning and investment allocation information concerning its

  2  products and services.

  3         (9)  INVESTMENT OPTIONS OR PRODUCTS; PERFORMANCE

  4  REVIEW.--

  5         (a)  The board shall develop policy and procedures for

  6  selecting, evaluating, and monitoring the performance of

  7  approved providers and investment products to which employees

  8  may direct retirement contributions under the program. In

  9  accordance with such policy and procedures, the board shall

10  designate and contract for a number of investment products as

11  determined by the board. The board shall also select one or

12  more bundled providers each of whom may offer multiple who

13  offer multiple investment options and related services

14  products when such an approach is determined by the board to

15  afford value to the participants otherwise not available

16  through individual investment products. Each approved bundled

17  provider may offer investment options that provide

18  participants with the opportunity to invest in each of the

19  following asset classes, to be composed of individual options

20  that represent either a single asset class or a combination

21  thereof:  money markets, United States fixed income, United

22  States equities, and foreign stock. The board shall review and

23  manage all educational materials, contract terms, fee

24  schedules, and other aspects of the approved provider

25  relationships to ensure that no provider is unduly favored or

26  penalized by virtue of its status within the plan.

27         (b)  The board shall consider investment options or

28  products it considers appropriate to give participants the

29  opportunity to accumulate retirement benefits, subject to the

30  following:

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    CS for SB 2                                    Third Engrossed



  1         1.  The Public Employee Optional Retirement Program

  2  must offer a diversified mix of low-cost investment products

  3  that span the risk-return spectrum and may include a

  4  guaranteed account as well as investment products, such as

  5  individually allocated guaranteed and variable annuities,

  6  which meet the requirements of this subsection and combine the

  7  ability to accumulate investment returns with the option of

  8  receiving lifetime income consistent with the long-term

  9  retirement security of a pension plan and similar to the

10  lifetime-income benefit provided by the Florida Retirement

11  System.

12         2.  Investment options or products offered by the group

13  of approved providers may include mutual funds, group annuity

14  contracts, individual retirement annuities, interests in

15  trusts, collective trusts, separate accounts, and other such

16  financial instruments, and may include products that give

17  participants the option of committing their contributions for

18  an extended time period in an effort to obtain returns higher

19  than those that could be obtained from investment products

20  offering full liquidity.

21         3.  The board shall not contract with any provider that

22  imposes a front-end, back-end, contingent, or deferred sales

23  charge, or any other fee that limits or restricts the ability

24  of participants to select any investment product available in

25  the optional program. This prohibition does not apply to fees

26  or charges that are imposed on withdrawals from products that

27  give participants the option of committing their contributions

28  for an extended time period in an effort to obtain returns

29  higher than those that could be obtained from investment

30  products offering full liquidity, provided that the product in

31  question, net of all fees and charges, produces material


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    CS for SB 2                                    Third Engrossed



  1  benefits relative to other comparable products in the program

  2  offering full liquidity.

  3         4.  Fees or charges for insurance features, such as

  4  mortality and expense-risk charges, must be reasonable

  5  relative to the benefits provided.

  6         (f)1.  An approved provider shall comply with all

  7  federal and state securities and insurance laws and

  8  regulations applicable to the provider, as well as the

  9  applicable rules and guidelines of the National Association of

10  Securities Dealers which govern the ethical marketing of

11  investment products. In furtherance of this mandate, an

12  approved provider must agree in its contract with the board to

13  establish and maintain a compliance education and monitoring

14  system to supervise the activities of all personnel who

15  directly communicate with individual participants and

16  recommend investment products, which system is consistent with

17  rules of the National Association of Securities Dealers.

18         2.  Approved provider personnel who directly

19  communicate with individual participants and who recommend

20  investment products shall make an independent and unbiased

21  determination as to whether an investment product is suitable

22  for a particular participant.

23         3.  The board shall develop procedures to receive and

24  resolve participant complaints against a provider or approved

25  provider personnel, and, when appropriate, refer such

26  complaints to the appropriate agency.

27         4.  Approved providers may not sell or in any way

28  distribute any customer list or participant identification

29  information generated through their offering of products or

30  services through the optional retirement program.

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    CS for SB 2                                    Third Engrossed



  1         Section 6.  Subsection (9) is added to section

  2  121.0515, Florida Statutes, to read:

  3         121.0515  Special risk membership.--

  4         (9)  CREDIT FOR UPGRADED SERVICE.--Any member of the

  5  Special Risk Class who has earned creditable service in

  6  another membership class of the Florida Retirement System as

  7  an emergency medical technician or paramedic, which service is

  8  within the purview of the Special Risk Class, may purchase

  9  additional retirement credit to upgrade such service to

10  Special Risk Class service, to the extent of the percentages

11  of the member's average final compensation provided in s.

12  121.091(1)(a)2. Contributions for upgrading such service to

13  Special Risk Class credit under this subsection shall be equal

14  to the difference in the contributions paid and the Special

15  Risk Class contribution rate as a percentage of gross salary

16  in effect for the period being claimed, plus interest thereon

17  at the rate of 6.5 percent a year, compounded annually until

18  the date of payment. This service credit may be purchased by

19  the employer on behalf of the member.

20         Section 7.  It is the intent of the Legislature that

21  any additional cost attributable to the upgrade in the

22  retirement benefits for emergency medical technicians and

23  paramedics above the contributions paid in accordance with

24  section 4 of this act shall be funded by recognition of the

25  necessary amount from the excess actuarial assets of the

26  Florida Retirement System Trust Fund.

27         Section 8.  Paragraph (e) of subsection (3) of section

28  121.052, Florida Statutes, is amended to read:

29         121.052  Membership class of elected officers.--

30         (3)  PARTICIPATION AND WITHDRAWAL,

31  GENERALLY.--Effective July 1, 1990, participation in the


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    CS for SB 2                                    Third Engrossed



  1  Elected Officers' Class shall be compulsory for elected

  2  officers listed in paragraphs (2)(a)-(d) and (f) assuming

  3  office on or after said date, unless the elected officer

  4  elects membership in another class or withdraws from the

  5  Florida Retirement System as provided in paragraphs

  6  (3)(a)-(d):

  7         (e)  Effective July 1, 2001 1997, the governing body of

  8  a municipality or special district may, by majority vote,

  9  elect to designate all its elected positions for inclusion in

10  the Elected Officers' Class. Such election shall be made

11  between July 1, 2001 1997, and December 31, 2001 1997, and

12  shall be irrevocable. The designation of such positions shall

13  be effective the first day of the month following receipt by

14  the department of the ordinance or resolution passed by the

15  governing body.

16         Section 9.  The appointment of the executive director

17  of the State Board of Administration shall be subject to the

18  approval by a majority vote of the Board of Trustees of the

19  State Board of Administration and the Governor must vote on

20  the prevailing side. Such appointment must be reaffirmed in

21  the same manner by the Board of Trustees on an annual basis.

22         Section 10.  For those members with creditable service

23  in the Florida Retirement System Special Risk Class who have

24  retirement service credit in the Special Risk Class after

25  September 30, 1978, and before January 1, 1993, and who

26  retired or entered the Deferred Retirement Option Program of

27  the Florida Retirement System prior to July 1, 2000, such

28  members, or their beneficiaries if the member is deceased,

29  shall receive a one-time special cost-of-living increase on

30  January 1, 2002, equal to 12 percent of their gross retirement

31  benefit. Such increase shall be in addition to the normal


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    CS for SB 2                                    Third Engrossed



  1  cost-of-living increase provided to such members on July 1,

  2  2001.

  3         Section 11.  It is the intent of the Legislature that

  4  the costs attributable to the additional cost-of-living

  5  increase for special risk retirees and Deferred Retirement

  6  Option Program participants as provided under section 2 shall

  7  be funded by recognition of excess actuarial assets, amortized

  8  over 30 years with the payments assumed to remain relatively

  9  stable when expressed as a percentage of payroll. For fiscal

10  year 2001-2002, the payment shall be $9.3 million. For fiscal

11  year 2002-2003, the payment shall be $19 million, and,

12  thereafter, payments shall increase by 5 percent per year. If

13  insufficient funds are available to fund this additional cost

14  through recognition of excess actuarial assets in fiscal year

15  2002-2003 and any year thereafter, and there remains an

16  unfunded actuarial liability attributable to the one-time

17  cost-of-living increase provided under section 2, the payroll

18  contribution rate for the Special Risk Class of the Florida

19  Retirement System shall be increased by .93 percent effective

20  July 1 of that year, unless the Legislature provides an

21  alternative funding mechanism before that date.

22         Section 12.  The Legislature finds that a proper and

23  legitimate state purpose is served when employees and retirees

24  of the state and its political subdivisions and the

25  dependents, survivors, and beneficiaries of such employees and

26  retirees are extended the basic protections afforded by

27  governmental retirement systems that provide fair and adequate

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

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

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

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    CS for SB 2                                    Third Engrossed



  1  Florida Statutes. Therefore, the Legislature determines and

  2  declares that this act fulfills an important state interest.

  3         Section 13.  This act shall take effect July 1, 2001.

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