HB 0083 2003
1	A bill to be entitled
2	An act relating to the Florida Retirement System; amending
3	s. 121.091, F.S.; increasing the period of time in which
4	members of the system who are employed as instructional
5	personnel in grades K-12 may participate in the DROP;
6	providing a time period for certain retired members to
7	participate in the DROP; providing an effective date.
8
9	Be It Enacted by the Legislature of the State of Florida:
10
11	Section 1. Subsection (13) of section 121.091, Florida
12	Statutes, is amended to read:
13	121.091 Benefits payable under the system.--Benefits may
14	not be paid under this section unless the member has terminated
15	employment as provided in s. 121.021(39)(a) or begun
16	participation in the Deferred Retirement Option Program as
17	provided in subsection (13), and a proper application has been
18	filed in the manner prescribed by the department. The department
19	may cancel an application for retirement benefits when the
20	member or beneficiary fails to timely provide the information
21	and documents required by this chapter and the department's
22	rules. The department shall adopt rules establishing procedures
23	for application for retirement benefits and for the cancellation
24	of such application when the required information or documents
25	are not received.
26	(13) DEFERRED RETIREMENT OPTION PROGRAM.--In general, and
27	subject to the provisions of this section, the Deferred
28	Retirement Option Program, hereinafter referred to as the DROP,
29	is a program under which an eligible member of the Florida
30	Retirement System may elect to participate, deferring receipt of
31	retirement benefits while continuing employment with his or her
32	Florida Retirement System employer. The deferred monthly
33	benefits shall accrue in the System Trust Fund on behalf of the
34	participant, plus interest compounded monthly, for the specified
35	period of the DROP participation, as provided in paragraph (c).
36	Upon termination of employment, the participant shall receive
37	the total DROP benefits and begin to receive the previously
38	determined normal retirement benefits. Participation in the DROP
39	does not guarantee employment for the specified period of DROP.
40	(a) Eligibility of member to participate in the DROP.--All
41	active Florida Retirement System members in a regularly
42	established position, and all active members of either the
43	Teachers' Retirement System established in chapter 238 or the
44	State and County Officers' and Employees' Retirement System
45	established in chapter 122 which systems are consolidated within
46	the Florida Retirement System under s. 121.011, are eligible to
47	elect participation in the DROP provided that:
48	1. The member is not a renewed member of the Florida
49	Retirement System under s. 121.122, or a member of the State
50	Community College System Optional Retirement Program under s.
51	121.051, the Senior Management Service Optional Annuity Program
52	under s. 121.055, or the optional retirement program for the
53	State University System under s. 121.35.
54	2. Except as provided in subparagraph 6., election to
55	participate is made within 12 months immediately following the
56	date on which the member first reaches normal retirement date,
57	or, for a member who reaches normal retirement date based on
58	service before he or she reaches age 62, or age 55 for Special
59	Risk Class members, election to participate may be deferred to
60	the 12 months immediately following the date the member attains
61	57, or age 52 for Special Risk Class members. For a member who
62	first reached normal retirement date or the deferred eligibility
63	date described above prior to the effective date of this
64	section, election to participate shall be made within 12 months
65	after the effective date of this section. A member who fails to
66	make an election within such 12-month limitation period shall
67	forfeit all rights to participate in the DROP. The member shall
68	advise his or her employer and the division in writing of the
69	date on which the DROP shall begin. Such beginning date may be
70	subsequent to the 12-month election period, but must be within
71	the 60-monthor, with respect to members who are instructional
72	personnel, in grades K-12, the 96-monthlimitation period as
73	provided in subparagraph (b)1. When establishing eligibility of
74	the member to participate in the DROP for the 60-monthor, with
75	respect to members who are instructional personnel, in grades K-
76	12, the 96-monthmaximum participation period, the member may
77	elect to include or exclude any optional service credit
78	purchased by the member from the total service used to establish
79	the normal retirement date. A member with dual normal retirement
80	dates shall be eligible to elect to participate in DROP within
81	12 months after attaining normal retirement date in either
82	class.
83	3. The employer of a member electing to participate in the
84	DROP, or employers if dually employed, shall acknowledge in
85	writing to the division the date the member's participation in
86	the DROP begins and the date the member's employment and DROP
87	participation will terminate.
88	4. Simultaneous employment of a participant by additional
89	Florida Retirement System employers subsequent to the
90	commencement of participation in the DROP shall be permissible
91	provided such employers acknowledge in writing a DROP
92	termination date no later than the participant's existing
93	termination date or the 60-month limitation period as provided
94	in subparagraph (b)1.
95	5. A DROP participant may change employers while
96	participating in the DROP, subject to the following:
97	a. A change of employment must take place without a break
98	in service so that the member receives salary for each month of
99	continuous DROP participation. If a member receives no salary
100	during a month, DROP participation shall cease unless the
101	employer verifies a continuation of the employment relationship
102	for such participant pursuant to s. 121.021(39)(b).
103	b. Such participant and new employer shall notify the
104	division on forms required by the division as to the identity of
105	the new employer.
106	c. The new employer shall acknowledge, in writing, the
107	participant's DROP termination date, which may be extended but
108	not beyond the original 60-monthor, with respect to members who
109	are instructional personnel, in grades K-12, the 96-monthperiod
110	provided in subparagraph (b)1., shall acknowledge liability for
111	any additional retirement contributions and interest required if
112	the participant fails to timely terminate employment, and shall
113	be subject to the adjustment required in sub-subparagraph
114	(c)5.d.
115	6. Effective July 1, 2001, for instructional personnel as
116	defined in s. 1012.01(2), election to participate in the DROP
117	shall be made at any time following the date on which the member
118	first reaches normal retirement date. The member shall advise
119	his or her employer and the division in writing of the date on
120	which the Deferred Retirement Option Program shall begin. When
121	establishing eligibility of the member to participate in the
122	DROP for the 60-monthor, with respect to members who are
123	instructional personnel, in grades K-12, the 96-monthmaximum
124	participation period, as provided in subparagraph (b)1., the
125	member may elect to include or exclude any optional service
126	credit purchased by the member from the total service used to
127	establish the normal retirement date. A member with dual normal
128	retirement dates shall be eligible to elect to participate in
129	either class.
130	(b) Participation in the DROP.--
131	1. An eligible member may elect to participate in the DROP
132	for a period not to exceed a maximum of 60 calendar monthsor,
133	with respect to members who are instructional personnel, in
134	grades K-12, a maximum of 96-monthsimmediately following the
135	date on which the member first reaches his or her normal
136	retirement date or the date to which he or she is eligible to
137	defer his or her election to participate as provided in
138	subparagraph (a)2. However, a member who has reached normal
139	retirement date prior to the effective date of the DROP shall be
140	eligible to participate in the DROP for a period of time not to
141	exceed 60 calendar monthsor, with respect to members who are
142	instructional personnel, in grades K-12, 96 calendar months
143	immediately following the effective date of the DROP, except a
144	member of the Special Risk Class who has reached normal
145	retirement date prior to the effective date of the DROP and
146	whose total accrued value exceeds 75 percent of average final
147	compensation as of his or her effective date of retirement shall
148	be eligible to participate in the DROP for no more than 36
149	calendar months immediately following the effective date of the
150	DROP.
151	2. Upon deciding to participate in the DROP, the member
152	shall submit, on forms required by the division:
153	a. A written election to participate in the DROP;
154	b. Selection of the DROP participation and termination
155	dates, which satisfy the limitations stated in paragraph (a) and
156	subparagraph 1. Such termination date shall be in a binding
157	letter of resignation with the employer, establishing a deferred
158	termination date. The member may change the termination date
159	within the limitations of subparagraph 1., but only with the
160	written approval of his or her employer;
161	c. A properly completed DROP application for service
162	retirement as provided in this section; and
163	d. Any other information required by the division.
164	3. The DROP participant shall be a retiree under the
165	Florida Retirement System for all purposes, except for paragraph
166	(5)(f) and subsection (9) and ss. 112.3173, 112.363, 121.053,
167	and 121.122. However, participation in the DROP does not alter
168	the participant's employment status and such employee shall not
169	be deemed retired from employment until his or her deferred
170	resignation is effective and termination occurs as provided in
171	s. 121.021(39).
172	4. Elected officers shall be eligible to participate in
173	the DROP subject to the following:
174	a. An elected officer who reaches normal retirement date
175	during a term of office may defer the election to participate in
176	the DROP until the next succeeding term in that office. Such
177	elected officer who exercises this option may participate in the
178	DROP for up to 60 calendar months or a period of no longer than
179	such succeeding term of office, whichever is less.
180	b. An elected or a nonelected participant may run for a
181	term of office while participating in DROP and, if elected,
182	extend the DROP termination date accordingly, except, however,
183	if such additional term of office exceeds the 60-monthor, with
184	respect to members who are instructional personnel, in grades K-
185	12, the 96-monthlimitation established in subparagraph 1., and
186	the officer does not resign from office within such60-month
187	limitation, the retirement and the participant's DROP shall be
188	null and void as provided in sub-subparagraph (c)5.d.
189	c. An elected officer who is dually employed and elects to
190	participate in DROP shall be required to satisfy the definition
191	of termination within the60-monthlimitation period as provided
192	in subparagraph 1. for the nonelected position and may continue
193	employment as an elected officer as provided in s. 121.053. The
194	elected officer will be enrolled as a renewed member in the
195	Elected Officers' Class or the Regular Class, as provided in ss.
196	121.053 and 121.22, on the first day of the month after
197	termination of employment in the nonelected position and
198	termination of DROP. Distribution of the DROP benefits shall be
199	made as provided in paragraph (c).
200	(c) Benefits payable under the DROP.--
201	1. Effective with the date of DROP participation, the
202	member's initial normal monthly benefit, including creditable
203	service, optional form of payment, and average final
204	compensation, and the effective date of retirement shall be
205	fixed. The beneficiary established under the Florida Retirement
206	System shall be the beneficiary eligible to receive any DROP
207	benefits payable if the DROP participant dies prior to the
208	completion of the period of DROP participation. In the event a
209	joint annuitant predeceases the member, the member may name a
210	beneficiary to receive accumulated DROP benefits payable. Such
211	retirement benefit, the annual cost of living adjustments
212	provided in s. 121.101, and interest shall accrue monthly in the
213	System Trust Fund. Such interest shall accrue at an effective
214	annual rate of 6.5 percent compounded monthly, on the prior
215	month's accumulated ending balance, up to the month of
216	termination or death.
217	2. Each employee who elects to participate in the DROP
218	shall be allowed to elect to receive a lump-sum payment for
219	accrued annual leave earned in accordance with agency policy
220	upon beginning participation in the DROP. Such accumulated leave
221	payment certified to the division upon commencement of DROP
222	shall be included in the calculation of the member's average
223	final compensation. The employee electing such lump-sum payment
224	upon beginning participation in DROP will not be eligible to
225	receive a second lump-sum payment upon termination, except to
226	the extent the employee has earned additional annual leave which
227	combined with the original payment does not exceed the maximum
228	lump-sum payment allowed by the employing agency's policy or
229	rules. Such early lump-sum payment shall be based on the hourly
230	wage of the employee at the time he or she begins participation
231	in the DROP. If the member elects to wait and receive such lump-
232	sum payment upon termination of DROP and termination of
233	employment with the employer, any accumulated leave payment made
234	at that time cannot be included in the member's retirement
235	benefit, which was determined and fixed by law when the employee
236	elected to participate in the DROP.
237	3. The effective date of DROP participation and the
238	effective date of retirement of a DROP participant shall be the
239	first day of the month selected by the member to begin
240	participation in the DROP, provided such date is properly
241	established, with the written confirmation of the employer, and
242	the approval of the division, on forms required by the division.
243	4. Normal retirement benefits and interest thereon shall
244	continue to accrue in the DROP until the established termination
245	date of the DROP, or until the participant terminates employment
246	or dies prior to such date. Although individual DROP accounts
247	shall not be established, a separate accounting of each
248	participant's accrued benefits under the DROP shall be
249	calculated and provided to participants.
250	5. At the conclusion of the participant's DROP, the
251	division shall distribute the participant's total accumulated
252	DROP benefits, subject to the following provisions:
253	a. The division shall receive verification by the
254	participant's employer or employers that such participant has
255	terminated employment as provided in s. 121.021(39)(b).
256	b. The terminated DROP participant or, if deceased, such
257	participant's named beneficiary, shall elect on forms provided
258	by the division to receive payment of the DROP benefits in
259	accordance with one of the options listed below. For a
260	participant or beneficiary who fails to elect a method of
261	payment within 60 days of termination of the DROP, the division
262	will pay a lump sum as provided in sub-sub-subparagraph (I).
263	(I) Lump sum.--All accrued DROP benefits, plus interest,
264	less withholding taxes remitted to the Internal Revenue Service,
265	shall be paid to the DROP participant or surviving beneficiary.
266	(II) Direct rollover.--All accrued DROP benefits, plus
267	interest, shall be paid from the DROP directly to the custodian
268	of an eligible retirement plan as defined in s. 402(c)(8)(B) of
269	the Internal Revenue Code. However, in the case of an eligible
270	rollover distribution to the surviving spouse of a deceased
271	participant, an eligible retirement plan is an individual
272	retirement account or an individual retirement annuity as
273	described in s. 402(c)(9) of the Internal Revenue Code.
274	(III) Partial lump sum.--A portion of the accrued DROP
275	benefits shall be paid to the DROP participant or surviving
276	spouse, less withholding taxes remitted to the Internal Revenue
277	Service, and the remaining DROP benefits shall be transferred
278	directly to the custodian of an eligible retirement plan as
279	defined in s. 402(c)(8)(B) of the Internal Revenue Code.
280	However, in the case of an eligible rollover distribution to the
281	surviving spouse of a deceased participant, an eligible
282	retirement plan is an individual retirement account or an
283	individual retirement annuity as described in s. 402(c)(9) of
284	the Internal Revenue Code. The proportions shall be specified by
285	the DROP participant or surviving beneficiary.
286	c. The form of payment selected by the DROP participant or
287	surviving beneficiary complies with the minimum distribution
288	requirements of the Internal Revenue Code.
289	d. A DROP participant who fails to terminate employment as
290	defined in s. 121.021(39)(b) shall be deemed not to be retired,
291	and the DROP election shall be null and void. Florida Retirement
292	System membership shall be reestablished retroactively to the
293	date of the commencement of the DROP, and each employer with
294	whom the participant continues employment shall be required to
295	pay to the System Trust Fund the difference between the DROP
296	contributions paid in paragraph (i) and the contributions
297	required for the applicable Florida Retirement System class of
298	membership during the period the member participated in the
299	DROP, plus 6.5 percent interest compounded annually.
300	6. The accrued benefits of any DROP participant, and any
301	contributions accumulated under such program, shall not be
302	subject to assignment, execution, attachment, or to any legal
303	process whatsoever, except for qualified domestic relations
304	orders by a court of competent jurisdiction, income deduction
305	orders as provided in s. 61.1301, and federal income tax levies.
306	7. DROP participants shall not be eligible for disability
307	retirement benefits as provided in subsection (4).
308	(d) Death benefits under the DROP.--
309	1. Upon the death of a DROP participant, the named
310	beneficiary shall be entitled to apply for and receive the
311	accrued benefits in the DROP as provided in sub-subparagraph
312	(c)5.b.
313	2. The normal retirement benefit accrued to the DROP
314	during the month of a participant's death shall be the final
315	monthly benefit credited for such DROP participant.
316	3. Eligibility to participate in the DROP terminates upon
317	death of the participant. If the participant dies on or after
318	the effective date of enrollment in the DROP, but prior to the
319	first monthly benefit being credited to the DROP, Florida
320	Retirement System benefits shall be paid in accordance with
321	subparagraph (7)(c)1. or subparagraph 2.
322	4. A DROP participants' survivors shall not be eligible to
323	receive Florida Retirement System death benefits as provided in
324	paragraph (7)(d).
325	(e) Cost-of-living adjustment.--On each July 1, the
326	participants' normal retirement benefit shall be increased as
327	provided in s. 121.101.
328	(f) Retiree health insurance subsidy.--DROP participants
329	are not eligible to apply for the retiree health insurance
330	subsidy payments as provided in s. 112.363 until such
331	participants have terminated employment and participation in the
332	DROP.
333	(g) Renewed membership.--DROP participants shall not be
334	eligible for renewed membership in the Florida Retirement System
335	under ss. 121.053 and 121.122 until termination of employment is
336	effectuated as provided in s. 121.021(39)(b).
337	(h) Employment limitation after DROP participation.--Upon
338	satisfying the definition of termination of employment as
339	provided in s. 121.021(39)(b), DROP participants shall be
340	subject to such reemployment limitations as other retirees.
341	Reemployment restrictions applicable to retirees as provided in
342	subsection (9) shall not apply to DROP participants until their
343	employment and participation in the DROP are terminated.
344	(i) Contributions.--
345	1. All employers paying the salary of a DROP participant
346	filling a regularly established position shall contribute 8.0
347	percent of such participant's gross compensation for the period
348	of July 1, 2002, through June 30, 2003, and 11.56 percent of
349	such compensation thereafter, which shall constitute the entire
350	employer DROP contribution with respect to such participant.
351	Such contributions, payable to the System Trust Fund in the same
352	manner as required in s. 121.071, shall be made as appropriate
353	for each pay period and are in addition to contributions
354	required for social security and the Retiree Health Insurance
355	Subsidy Trust Fund. Such employer, social security, and health
356	insurance subsidy contributions are not included in the DROP.
357	2. The employer shall, in addition to subparagraph 1.,
358	also withhold one-half of the entire social security
359	contribution required for the participant. Contributions for
360	social security by each participant and each employer, in the
361	amount required for social security coverage as now or hereafter
362	provided by the federal Social Security Act, shall be in
363	addition to contributions specified in subparagraph 1.
364	3. All employers paying the salary of a DROP participant
365	filling a regularly established position shall contribute the
366	percent of such participant's gross compensation required in s.
367	121.071(4), which shall constitute the employer's health
368	insurance subsidy contribution with respect to such participant.
369	Such contributions shall be deposited by the administrator in
370	the Retiree Health Insurance Subsidy Trust Fund.
371	(j) Forfeiture of retirement benefits.--Nothing in this
372	section shall be construed to remove DROP participants from the
373	scope of s. 8(d), Art. II of the State Constitution, s.
374	112.3173, and paragraph (5)(f). DROP participants who commit a
375	specified felony offense while employed will be subject to
376	forfeiture of all retirement benefits, including DROP benefits,
377	pursuant to those provisions of law.
378	(k) Administration of program.--The division shall make
379	such rules as are necessary for the effective and efficient
380	administration of this subsection. The division shall not be
381	required to advise members of the federal tax consequences of an
382	election related to the DROP but may advise members to seek
383	independent advice.
384	Section 2.Commencing on July 1, 2003, there shall be a
385	one-time period of 45 days in which members of the Florida
386	Retirement System who have reached normal retirement date and
387	have not retired and did not elect to participate in the DROP
388	within one year of reaching normal retirement age may elect to
389	participate in the program.
390	Section 3.The Legislature finds that a proper and
391	legitimate state purpose is served when employees and retirees
392	of the state and of its political subdivisions, and the
393	dependants, survivors, and beneficiaries of such employees and
394	retirees, are extended the basic protections afforded by
395	governmental retirement systems that provide fair and adequate
396	benefits and that are managed, administered, and funded in an
397	actuarially sound manner, as required by s. 14, Art. X of the
398	State Constitution and part VII of chapter 112, Florida
399	Statutes. Therefore, the Legislature hereby determines and
400	declares that the provisions of this act fulfill an important
401	state interest.
402	Section 4. This act shall take effect June 30, 2003.
403