HB 1271

1	A bill to be entitled
2	An act relating to state financial matters; amending s.
3	112.363, F.S.; specifying spouse at time of death as
4	beneficiary for purposes of the retiree health insurance
5	subsidy; providing an exception; amending s. 121.4501,
6	F.S., relating to the Public Employee Optional Retirement
7	Program; providing a definition; providing deadlines for
8	certain employees for election and removal from the
9	optional retirement program; requiring an employer to
10	communicate retirement options to employees; authorizing
11	certain employees to change retirement plans under certain
12	circumstances; authorizing certain additional persons to
13	participate in the optional retirement program under
14	certain circumstances; amending s. 121.591, F.S., relating
15	to benefits payable under the optional retirement program;
16	authorizing the State Board of Administration and the
17	Department of Management Services to cash out certain
18	accounts under certain circumstances; removing the ability
19	of a deceased disabled retiree's beneficiary to receive
20	certain trust fund account balances; amending s. 121.78,
21	F.S.; revising criteria for certain employer
22	contributions; requiring certain participants to repay
23	excess employer contributions under certain circumstances;
24	amending s. 215.47, F.S.; providing criteria for certain
25	fixed income obligations for investments; deleting a
26	provision allowing certain general foreign government-
27	backed investments; amending s. 215.475, F.S.; providing
28	for a Florida Retirement System Defined Benefit Plan
29	Investment Policy Statement instead of a plan; revising
30	provisions to conform; amending s. 215.5601, F.S., to
31	conform; providing an effective date.
32
33	Be It Enacted by the Legislature of the State of Florida:
34
35	Section 1.  Paragraph (e) of subsection (3) of section
36	112.363, Florida Statutes, is amended to read:
37	112.363  Retiree health insurance subsidy.--
38	(3)  RETIREE HEALTH INSURANCE SUBSIDY AMOUNT.--
39	(e)1.  Beginning July 1, 2001, each eligible retiree of the
40	defined benefit program of the Florida Retirement System, or, if
41	the retiree is deceased, his or her beneficiary who is receiving
42	a monthly benefit from such retiree's account and who is a
43	spouse, or a person who meets the definition of joint annuitant
44	in s. 121.021(28), shall receive a monthly retiree health
45	insurance subsidy payment equal to the number of years of
46	creditable service, as defined in s. 121.021(17), completed at
47	the time of retirement multiplied by $5; however, no eligible
48	retiree or beneficiary may receive a subsidy payment of more
49	than $150 or less than $30. If there are multiple beneficiaries,
50	the total payment must not be greater than the payment to which
51	the retiree was entitled. The health insurance subsidy amount
52	payable to any person receiving the retiree health insurance
53	subsidy payment on July 1, 2001, shall not be reduced solely by
54	operation of this subparagraph.
55	2.  Beginning July 1, 2002, each eligible participant of
56	the Public Employee Optional Retirement Program of the Florida
57	Retirement System who has met the requirements of this section,
58	or, if the participant is deceased, his or her spouse who is the
59	participant's designated beneficiary, shall receive a monthly
60	retiree health insurance subsidy payment equal to the number of
61	years of creditable service, as provided in this subparagraph,
62	completed at the time of retirement, multiplied by $5; however,
63	no eligible retiree or beneficiary may receive a subsidy payment
64	of more than $150 or less than $30. For purposes of determining
65	a participant's creditable service used to calculate the health
66	insurance subsidy, a participant's years of service credit or
67	fraction thereof shall be based on the participant's work year
68	as defined in s. 121.021(54). Credit shall be awarded for a full
69	work year whenever health insurance subsidy contributions have
70	been made as required by law for each month in the participant's
71	work year. In addition, all years of creditable service retained
72	under the Florida Retirement System defined benefit program
73	shall be included as creditable service for purposes of this
74	section. Notwithstanding any other provisions of this section,
75	the participant's spouse at the time of the participant's death
76	shall be the beneficiary unless such participant designates a
77	different beneficiary subsequent to the participant's most
78	recent marriage.
79	Section 2.  Paragraphs (j), (k), and (l) of subsection (2)
80	of section 121.4501, Florida Statutes, are redesignated as
81	paragraphs (k), (l), and (m), respectively, a new paragraph (j)
82	is added to said subsection, subsection (4) and paragraph (c) of
83	subsection (15) of said section are amended, paragraph (h) is
84	added to subsection (10) of said section, and subsection (20) is
85	added to said section, to read:
86	121.4501  Public Employee Optional Retirement Program.--
87	(2)  DEFINITIONS.--As used in this part, the term:
88	(j)  "Retiree" means a former participant of the Public
89	Employee Optional Retirement Program of the Florida Retirement
90	System who has terminated employment and has taken a distribution
91	as provided in s. 121.591, except for a mandatory distribution of
92	a de minimis account authorized by the state board.
93	(4)  PARTICIPATION; ENROLLMENT.--
94	(a)1.  With respect to an eligible employee who is employed
95	in a regularly established position on June 1, 2002, by a state
96	employer:
97	a.  Any such employee may elect to participate in the
98	Public Employee Optional Retirement Program in lieu of retaining
99	his or her membership in the defined benefit program of the
100	Florida Retirement System. The election must be made in writing
101	or by electronic means and must be filed with the third-party
102	administrator by August 31, 2002, or, in the case of an active
103	employee who is on a leave of absence on April 1, 2002, by
104	August 31, 2002, or by the last business day of the 5th month
105	following within 90 days after the conclusion of the leave of
106	absence, whichever is later. This election is irrevocable,
107	except as provided in paragraph (e). Upon making such election,
108	the employee shall be enrolled as a participant of the Public
109	Employee Optional Retirement Program, the employee's membership
110	in the Florida Retirement System shall be governed by the
111	provisions of this part, and the employee's membership in the
112	defined benefit program of the Florida Retirement System shall
113	terminate. The employee's enrollment in the Public Employee
114	Optional Retirement Program shall be effective the first day of
115	the month for which a full month's employer contribution is made
116	to the optional program.
117	b.  Any such employee who fails to elect to participate in
118	the Public Employee Optional Retirement Program within the
119	prescribed time period is deemed to have elected to retain
120	membership in the defined benefit program of the Florida
121	Retirement System, and the employee's option to elect to
122	participate in the optional program is forfeited.
123	2.  With respect to employees who become eligible to
124	participate in the Public Employee Optional Retirement Program
125	by reason of employment in a regularly established position with
126	a state employer commencing after April 1, 2002:
127	a.  Any such employee shall, by default, be enrolled in the
128	defined benefit retirement program of the Florida Retirement
129	System at the commencement of employment, and may, by the last
130	business day end of the 5th month following the employee's month
131	of hire, elect to participate in the Public Employee Optional
132	Retirement Program. The employee's election must be made in
133	writing or by electronic means and must be filed with the third-
134	party administrator. The election to participate in the optional
135	program is irrevocable, except as provided in paragraph (e).
136	b.  If the employee files such election within the
137	prescribed time period, enrollment in the optional program shall
138	be effective on the first day of employment. The employer
139	retirement contributions paid through the month of the employee
140	plan change shall be transferred to the optional program, and,
141	effective the first day of the next month, the employer shall
142	pay the applicable contributions based on the employee
143	membership class in the optional program.
144	c.  Any such employee who fails to elect to participate in
145	the Public Employee Optional Retirement Program within the
146	prescribed time period is deemed to have elected to retain
147	membership in the defined benefit program of the Florida
148	Retirement System, and the employee's option to elect to
149	participate in the optional program is forfeited.
150	3.  With respect to employees who become eligible to
151	participate in the Public Employee Optional Retirement Program
152	pursuant to s. 121.051(2)(c)3., any such employee may elect to
153	participate in the Public Employee Optional Retirement Program
154	in lieu of retaining his or her participation in the State
155	Community College Optional Retirement Program. The election must
156	be made in writing or by electronic means and must be filed with
157	the third-party administrator. This election is irrevocable,
158	except as provided in paragraph (e). Upon making such election,
159	the employee shall be enrolled as a participant of the Public
160	Employee Optional Retirement Program, the employee's membership
161	in the Florida Retirement System shall be governed by the
162	provisions of this part, and the employee's participation in the
163	State Community College Optional Retirement Program shall
164	terminate. The employee's enrollment in the Public Employee
165	Optional Retirement Program shall be effective the first day of
166	the month for which a full month's employer contribution is made
167	to the optional program.
168	4.  For purposes of this paragraph, "state employer" means
169	any agency, board, branch, commission, community college,
170	department, institution, institution of higher education, or
171	water management district of the state, which participates in
172	the Florida Retirement System for the benefit of certain
173	employees.
174	(b)1.  With respect to an eligible employee who is employed
175	in a regularly established position on September 1, 2002, by a
176	district school board employer:
177	a.  Any such employee may elect to participate in the
178	Public Employee Optional Retirement Program in lieu of retaining
179	his or her membership in the defined benefit program of the
180	Florida Retirement System. The election must be made in writing
181	or by electronic means and must be filed with the third-party
182	administrator by November 30, or, in the case of an active
183	employee who is on a leave of absence on July 1, 2002, by
184	November 30, 2002, or by the last business day of the 5th month
185	following within 90 days after the conclusion of the leave of
186	absence, whichever is later. This election is irrevocable,
187	except as provided in paragraph (e). Upon making such election,
188	the employee shall be enrolled as a participant of the Public
189	Employee Optional Retirement Program, the employee's membership
190	in the Florida Retirement System shall be governed by the
191	provisions of this part, and the employee's membership in the
192	defined benefit program of the Florida Retirement System shall
193	terminate. The employee's enrollment in the Public Employee
194	Optional Retirement Program shall be effective the first day of
195	the month for which a full month's employer contribution is made
196	to the optional program.
197	b.  Any such employee who fails to elect to participate in
198	the Public Employee Optional Retirement Program within the
199	prescribed time period is deemed to have elected to retain
200	membership in the defined benefit program of the Florida
201	Retirement System, and the employee's option to elect to
202	participate in the optional program is forfeited.
203	2.  With respect to employees who become eligible to
204	participate in the Public Employee Optional Retirement Program
205	by reason of employment in a regularly established position with
206	a district school board employer commencing after July 1, 2002:
207	a.  Any such employee shall, by default, be enrolled in the
208	defined benefit retirement program of the Florida Retirement
209	System at the commencement of employment, and may, by the last
210	business day end of the 5th month following the employee's month
211	of hire, elect to participate in the Public Employee Optional
212	Retirement Program. The employee's election must be made in
213	writing or by electronic means and must be filed with the third-
214	party administrator. The election to participate in the optional
215	program is irrevocable, except as provided in paragraph (e).
216	b.  If the employee files such election within the
217	prescribed time period, enrollment in the optional program shall
218	be effective on the first day of employment. The employer
219	retirement contributions paid through the month of the employee
220	plan change shall be transferred to the optional program, and,
221	effective the first day of the next month, the employer shall
222	pay the applicable contributions based on the employee
223	membership class in the optional program.
224	c.  Any such employee who fails to elect to participate in
225	the Public Employee Optional Retirement Program within the
226	prescribed time period is deemed to have elected to retain
227	membership in the defined benefit program of the Florida
228	Retirement System, and the employee's option to elect to
229	participate in the optional program is forfeited.
230	3.  For purposes of this paragraph, "district school board
231	employer" means any district school board that participates in
232	the Florida Retirement System for the benefit of certain
233	employees, or a charter school or charter technical career
234	center that participates in the Florida Retirement System as
235	provided in s. 121.051(2)(d).
236	(c)1.  With respect to an eligible employee who is employed
237	in a regularly established position on December 1, 2002, by a
238	local employer:
239	a.  Any such employee may elect to participate in the
240	Public Employee Optional Retirement Program in lieu of retaining
241	his or her membership in the defined benefit program of the
242	Florida Retirement System. The election must be made in writing
243	or by electronic means and must be filed with the third-party
244	administrator by February 28, 2003, or, in the case of an active
245	employee who is on a leave of absence on October 1, 2002, by
246	February 28, 2003, or by the last business day of the 5th month
247	following within 90 days after the conclusion of the leave of
248	absence, whichever is later. This election is irrevocable,
249	except as provided in paragraph (e). Upon making such election,
250	the employee shall be enrolled as a participant of the Public
251	Employee Optional Retirement Program, the employee's membership
252	in the Florida Retirement System shall be governed by the
253	provisions of this part, and the employee's membership in the
254	defined benefit program of the Florida Retirement System shall
255	terminate. The employee's enrollment in the Public Employee
256	Optional Retirement Program shall be effective the first day of
257	the month for which a full month's employer contribution is made
258	to the optional program.
259	b.  Any such employee who fails to elect to participate in
260	the Public Employee Optional Retirement Program within the
261	prescribed time period is deemed to have elected to retain
262	membership in the defined benefit program of the Florida
263	Retirement System, and the employee's option to elect to
264	participate in the optional program is forfeited.
265	2.  With respect to employees who become eligible to
266	participate in the Public Employee Optional Retirement Program
267	by reason of employment in a regularly established position with
268	a local employer commencing after October 1, 2002:
269	a.  Any such employee shall, by default, be enrolled in the
270	defined benefit retirement program of the Florida Retirement
271	System at the commencement of employment, and may, by the last
272	business day end of the 5th month following the employee's month
273	of hire, elect to participate in the Public Employee Optional
274	Retirement Program. The employee's election must be made in
275	writing or by electronic means and must be filed with the third-
276	party administrator. The election to participate in the optional
277	program is irrevocable, except as provided in paragraph (e).
278	b.  If the employee files such election within the
279	prescribed time period, enrollment in the optional program shall
280	be effective on the first day of employment. The employer
281	retirement contributions paid through the month of the employee
282	plan change shall be transferred to the optional program, and,
283	effective the first day of the next month, the employer shall
284	pay the applicable contributions based on the employee
285	membership class in the optional program.
286	c.  Any such employee who fails to elect to participate in
287	the Public Employee Optional Retirement Program within the
288	prescribed time period is deemed to have elected to retain
289	membership in the defined benefit program of the Florida
290	Retirement System, and the employee's option to elect to
291	participate in the optional program is forfeited.
292	3.  For purposes of this paragraph, "local employer" means
293	any employer not included in paragraph (a) or paragraph (b).
294	(d)  Contributions available for self-direction by a
295	participant who has not selected one or more specific investment
296	products shall be allocated as prescribed by the board. The
297	third-party administrator shall notify any such participant at
298	least quarterly that the participant should take an affirmative
299	action to make an asset allocation among the optional program
300	products.
301	(e)  After the period during which an eligible employee had
302	the choice to elect the defined benefit program or the Public
303	Employee Optional Retirement Program, or the month following the
304	date the eligible employee's plan selection became effective, if
305	sooner, the employee or terminated vested employee shall have
306	one opportunity, at the employee's discretion during his or her
307	lifetime, to choose to move from the defined benefit program to
308	the Public Employee Optional Retirement Program or from the
309	Public Employee Optional Retirement Program to the defined
310	benefit program. This paragraph shall be contingent upon
311	approval from the Internal Revenue Service for including the
312	choice described herein within the programs offered by the
313	Florida Retirement System.
314	1.  If the employee chooses to move to the Public Employee
315	Optional Retirement Program, the applicable provisions of this
316	section shall govern the transfer.
317	2.  If the employee chooses to move to the defined benefit
318	program, the employee must transfer from his or her Public
319	Employee Optional Retirement Program account and from other
320	employee moneys as necessary, a sum representing the present
321	value of that employee's accumulated benefit obligation
322	immediately following the time of such movement, determined
323	assuming that attained service equals the sum of service in the
324	defined benefit program and service in the Public Employee
325	Optional Retirement Program. Benefit commencement occurs on the
326	first date the employee would become eligible for unreduced
327	benefits, using the discount rate and other relevant actuarial
328	assumptions that were used to value the Florida Retirement
329	System defined benefit plan liabilities in the most recent
330	actuarial valuation. For any employee who, at the time of the
331	second election, already maintains an accrued benefit amount in
332	the defined benefit plan, the then-present value of such accrued
333	benefit shall be deemed part of the required transfer amount
334	described in this subparagraph. The division shall ensure that
335	the transfer sum is prepared using a formula and methodology
336	certified by an enrolled actuary.
337	3.  Notwithstanding subparagraph 2., an employee who
338	chooses to move to the defined benefit program and who became
339	eligible to participate in the Public Employee Optional
340	Retirement Program by reason of employment in a regularly
341	established position with a state employer after June 1, 2002; a
342	district school board employer after September 1, 2002; or a
343	local employer after December 1, 2002, must transfer from his or
344	her Public Employee Optional Retirement Program account and,
345	from other employee moneys as necessary, a sum representing that
346	employee's actuarial accrued liability.
347	4.  Employees' ability to transfer from the Florida
348	Retirement System defined benefit program to the Public Employee
349	Optional Retirement Program pursuant to paragraphs (a) through
350	(d), and the ability for current employees to have an option to
351	later transfer back into the defined benefit program under
352	subparagraph 2., shall be deemed a significant system amendment.
353	Pursuant to s. 121.031(4), any such resulting unfunded liability
354	arising from actual original transfers from the defined benefit
355	program to the optional program shall be amortized within 30
356	plan years as a separate unfunded actuarial base independent of
357	the reserve stabilization mechanism defined in s. 121.031(3)(f).
358	For the first 25 years, no direct amortization payment shall be
359	calculated for this base. During this 25-year period, such
360	separate base shall be used to offset the impact of employees
361	exercising their second program election under this paragraph.
362	It is the legislative intent that the actuarial funded status of
363	the Florida Retirement System defined benefit plan is neither
364	beneficially nor adversely impacted by such second program
365	elections in any significant manner, after due recognition of
366	the separate unfunded actuarial base. Following this initial 25-
367	year period, any remaining balance of the original separate base
368	shall be amortized over the remaining 5 years of the required
369	30-year amortization period.
370	5.  Notwithstanding the provisions of this section, any
371	terminated vested employee who is a participant in the Public
372	Employee Optional Retirement Program or the defined benefit
373	program may use his or her one-time opportunity to change
374	retirement plans as provided in this paragraph without having to
375	return to employment with an employer participating in the
376	Florida Retirement System.
377	(10)  EDUCATION COMPONENT.--
378	(h)  Pursuant to paragraph (8)(a), all Florida Retirement
379	System employers have an obligation to regularly communicate the
380	existence of the two Florida Retirement System plans and the plan
381	choice in the natural course of administering their personnel
382	functions using the educational materials supplied by the state
383	board and the Department of Management Services.
384	(15)  STATEMENT OF FIDUCIARY STANDARDS AND
385	RESPONSIBILITIES.--
386	(c)  Subparagraph (8)(b)4. and paragraph (15)(b)
387	incorporate the federal law concept of participant control,
388	established by regulations of the United States Department of
389	Labor under s. 404(c) of the Employee Retirement Income Security
390	Act of 1974 (ERISA). The purpose of this paragraph is to assist
391	employers and the State Board of Administration in maintaining
392	compliance with s. 404(c), while avoiding unnecessary costs and
393	eroding participant benefits under the Public Employee Optional
394	Retirement Program. Pursuant to 29 C.F.R. s. 2550.404c-
395	1(b)(2)(i)(B)(1)(viii), the State Board of Administration or its
396	designated agents shall deliver to participants of the Public
397	Employee Optional Retirement Program a copy of the prospectus
398	most recently provided to the plan and, pursuant to 29 C.F.R. s.
399	2550.404c-1(b)(2), or shall provide such participants an
400	opportunity to obtain this information, except that:
401	1.  The requirement to deliver a prospectus shall be deemed
402	to be satisfied by delivery of a fund profile that contains the
403	information that would be included in a summary prospectus as
404	described by Rule 498 under the Securities Act of 1933, 17
405	C.F.R. s. 230.498. When the transaction fees, expense
406	information or other information provided by a mutual fund in
407	the prospectus does not reflect terms negotiated by the State
408	Board of Administration or its designated agents, the
409	aforementioned requirement is deemed to be satisfied by delivery
410	of a separate document described by Rule 498 substituting
411	accurate information; and
412	2.  Delivery shall be deemed to have been effected if
413	delivery is through electronic means and the following standards
414	are satisfied:
415	a.  Electronically-delivered documents are prepared and
416	provided consistent with style, format, and content requirements
417	applicable to printed documents;
418	b.  Each participant is provided timely and adequate notice
419	of the documents that are to be delivered and their significance
420	thereof, and of the participant's right to obtain a paper copy
421	of such documents free of charge;
422	c.(I)  Participants have adequate access to the electronic
423	documents, at locations such as their worksites or public
424	facilities, and have the ability to convert the documents to
425	paper free of charge by the State Board of Administration, and
426	the board or its designated agents take appropriate and
427	reasonable measures to ensure that the system for furnishing
428	electronic documents results in actual receipt, or
429	(II)  Participants have provided consent to receive
430	information in electronic format, which consent may be revoked;
431	and
432	d.  The State Board of Administration, or its designated
433	agent, actually provides paper copies of the documents free of
434	charge, upon request.
435	(20)  PARTICIPATION BY VESTED TERMINATED FLORIDA RETIREMENT
436	SYSTEM MEMBERS.--Eligible employees shall include persons who are
437	vested in the defined benefit retirement plan offered under the
438	Florida Retirement System in compliance with the vesting
439	provisions in effect at the time of their termination, who
440	terminated covered employment prior to the establishment of the
441	Public Employee Optional Retirement Program, and who may not
442	otherwise be eligible to participate in the Public Employee
443	Optional Retirement Program pursuant to subsection (4). The State
444	Board of Administration shall not be responsible for locating
445	those persons who may be eligible to participate in the Public
446	Employee Optional Retirement Program under this subsection.
447	Section 3.  Section 121.591, Florida Statutes, is amended
448	to read:
449	121.591  Benefits payable under the Public Employee
450	Optional Retirement Program of the Florida Retirement
451	System.--Benefits may not be paid under this section unless the
452	member has terminated employment as provided in s.
453	121.021(39)(a) or is deceased and a proper application has been
454	filed in the manner prescribed by the state board or the
455	department. The state board or department, as appropriate, may
456	cancel an application for retirement benefits when the member or
457	beneficiary fails to timely provide the information and
458	documents required by this chapter and the rules of the state
459	board and department. In accordance with their respective
460	responsibilities as provided herein, the State Board of
461	Administration and the Department of Management Services shall
462	adopt rules establishing procedures for application for
463	retirement benefits and for the cancellation of such application
464	when the required information or documents are not received. The
465	State Board of Administration and the Department of Management
466	Services, as appropriate, are authorized to cash out a de
467	minimis account of a participant who has been terminated from
468	Florida Retirement System covered employment for a minimum of 6
469	calendar months. A de minimis account is an account containing
470	employer contributions and accumulated earnings of not more than
471	$5,000 made under the provisions of this chapter. Such cash-out
472	must either be a complete lump-sum liquidation of the account
473	balance, subject to the provisions of the Internal Revenue Code,
474	or a lump-sum direct rollover distribution paid directly to the
475	custodian of an eligible retirement plan, as defined by the
476	Internal Revenue Code, on behalf of the participant.
477	(1)  NORMAL BENEFITS.--Under the Public Employee Optional
478	Retirement Program:
479	(a)  Benefits in the form of vested accumulations as
480	described in s. 121.4501(6) shall be payable under this
481	subsection in accordance with the following terms and
482	conditions:
483	1.  To the extent vested, benefits shall be payable only to
484	a participant.
485	2.  Benefits shall be paid by the third-party administrator
486	or designated approved providers in accordance with the law, the
487	contracts, and any applicable board rule or policy.
488	3.  To receive benefits under this subsection, the
489	participant must be terminated from all employment with all
490	Florida Retirement System employers, as provided in s.
491	121.021(39).
492	(b)  If a participant elects to receive his or her benefits
493	upon termination of employment, the participant must submit a
494	written application to the third-party administrator indicating
495	his or her preferred distribution date and selecting an
496	authorized method of distribution as provided in paragraph (c).
497	The participant may defer receipt of benefits until he or she
498	chooses to make such application, subject to federal
499	requirements.
500	(c)  Upon receipt by the third-party administrator of a
501	properly executed application for distribution of benefits, the
502	total accumulated benefit shall be payable to the participant,
503	as:
504	1.  A lump-sum distribution to the participant;
505	2.  A lump-sum direct rollover distribution whereby all
506	accrued benefits, plus interest and investment earnings, are
507	paid from the participant's account directly to the custodian of
508	an eligible retirement plan, as defined in s. 402(c)(8)(B) of
509	the Internal Revenue Code, on behalf of the participant; or
510	3.  Periodic distributions, as authorized by the state
511	board.
512	(2)  DISABILITY RETIREMENT BENEFITS.--Benefits provided
513	under this subsection are payable in lieu of the benefits which
514	would otherwise be payable under the provisions of subsection
515	(1). Such benefits shall be funded entirely from employer
516	contributions made under s. 121.571, transferred participant
517	funds accumulated pursuant to paragraph (a), and interest and
518	earnings thereon. Pursuant thereto:
519	(a)  Transfer of funds.--To qualify to receive monthly
520	disability benefits under this subsection:
521	1.  All moneys accumulated in the participant's Public
522	Employee Optional Retirement Program accounts, including vested
523	and nonvested accumulations as described in s. 121.4501(6),
524	shall be transferred from such individual accounts to the
525	Division of Retirement for deposit in the disability account of
526	the Florida Retirement System Trust Fund. Such moneys shall be
527	separately accounted for. Earnings shall be credited on an
528	annual basis for amounts held in the disability accounts of the
529	Florida Retirement System Trust Fund based on actual earnings of
530	the Florida Retirement System Trust Fund.
531	2.  If the participant has retained retirement credit he or
532	she had earned under the defined benefit program of the Florida
533	Retirement System as provided in s. 121.4501(3)(b), a sum
534	representing the actuarial present value of such credit within
535	the Florida Retirement System Trust Fund shall be reassigned by
536	the Division of Retirement from the defined benefit program to
537	the disability program as implemented under this subsection and
538	shall be deposited in the disability account of the Florida
539	Retirement System Trust Fund. Such moneys shall be separately
540	accounted for.
541	(b)  Disability retirement; entitlement.--
542	1.  A participant of the Public Employee Optional
543	Retirement Program who becomes totally and permanently disabled,
544	as defined in s. 121.091(4)(b), after completing 8 years of
545	creditable service, or a participant who becomes totally and
546	permanently disabled in the line of duty regardless of his or
547	her length of service, shall be entitled to a monthly disability
548	benefit as provided herein.
549	2.  In order for service to apply toward the 8 years of
550	service required to vest for regular disability benefits, or
551	toward the creditable service used in calculating a service-
552	based benefit as provided for under paragraph (g), the service
553	must be creditable service as described below:
554	a.  The participant's period of service under the Public
555	Employee Optional Retirement Program will be considered
556	creditable service, except as provided in subparagraph d.
557	b.  If the participant has elected to retain credit for his
558	or her service under the defined benefit program of the Florida
559	Retirement System as provided under s. 121.4501(3)(b), all such
560	service will be considered creditable service.
561	c.  If the participant has elected to transfer to his or
562	her participant accounts a sum representing the present value of
563	his or her retirement credit under the defined benefit program
564	as provided under s. 121.4501(3)(c), the period of service under
565	the defined benefit program represented in the present value
566	amounts transferred will be considered creditable service for
567	purposes of vesting for disability benefits, except as provided
568	in subparagraph d.
569	d.  Whenever a participant has terminated employment and
570	has taken distribution of his or her funds as provided in
571	subsection (1), all creditable service represented by such
572	distributed funds is forfeited for purposes of this subsection.
573	(c)  Disability retirement effective date.--The effective
574	retirement date for a participant who applies and is approved
575	for disability retirement shall be established as provided under
576	s. 121.091(4)(a)2. and 3.
577	(d)  Total and permanent disability.--A participant shall
578	be considered totally and permanently disabled if, in the
579	opinion of the division, he or she is prevented, by reason of a
580	medically determinable physical or mental impairment, from
581	rendering useful and efficient service as an officer or
582	employee.
583	(e)  Proof of disability.--The division, before approving
584	payment of any disability retirement benefit, shall require
585	proof that the participant is totally and permanently disabled
586	in the same manner as provided for members of the defined
587	benefit program of the Florida Retirement System under s.
588	121.091(4)(c).
589	(f)  Disability retirement benefit.--Upon the disability
590	retirement of a participant under this subsection, the
591	participant shall receive a monthly benefit that shall begin to
592	accrue on the first day of the month of disability retirement,
593	as approved by the division, and shall be payable on the last
594	day of that month and each month thereafter during his or her
595	lifetime and continued disability. All disability benefits
596	payable to such member shall be paid out of the disability
597	account of the Florida Retirement System Trust Fund established
598	under this subsection.
599	(g)  Computation of disability retirement benefit.--The
600	amount of each monthly payment shall be calculated in the same
601	manner as provided for members of the defined benefit program of
602	the Florida Retirement System under s. 121.091(4)(f). For such
603	purpose, creditable service under both the defined benefit
604	program and the Public Employee Optional Retirement Program of
605	the Florida Retirement System shall be applicable as provided
606	under paragraph (b).
607	(h)  Reapplication.--A participant whose initial
608	application for disability retirement has been denied may
609	reapply for disability benefits in the same manner, and under
610	the same conditions, as provided for members of the defined
611	benefit program of the Florida Retirement System under s.
612	121.091(4)(g).
613	(i)  Membership.--Upon approval of an application for
614	disability benefits under this subsection, the applicant shall
615	be transferred to the defined benefit program of the Florida
616	Retirement System, effective upon his or her disability
617	retirement effective date.
618	(j)  Option to cancel.--Any participant whose application
619	for disability benefits is approved may cancel his or her
620	application for disability benefits, provided that the
621	cancellation request is received by the division before a
622	disability retirement warrant has been deposited, cashed, or
623	received by direct deposit. Upon such cancellation:
624	1.  The participant's transfer to the defined benefit
625	program under paragraph (i) shall be nullified;
626	2.  The participant shall be retroactively reinstated in
627	the Public Employee Optional Retirement Program without hiatus;
628	3.  All funds transferred to the Florida Retirement System
629	Trust Fund under paragraph (a) shall be returned to the
630	participant accounts from which such funds were drawn; and
631	4.  The participant may elect to receive the benefit
632	payable under the provisions of subsection (1) in lieu of
633	disability benefits as provided under this subsection.
634	(k)  Recovery from disability.--
635	1.  The division may require periodic reexaminations at the
636	expense of the disability program account of the Florida
637	Retirement System Trust Fund. Except as otherwise provided in
638	subparagraph 2., the requirements, procedures, and restrictions
639	relating to the conduct and review of such reexaminations,
640	discontinuation or termination of benefits, reentry into
641	employment, disability retirement after reentry into covered
642	employment, and all other matters relating to recovery from
643	disability shall be the same as are set forth under s.
644	121.091(4)(h).
645	2.  Upon recovery from disability, any recipient of
646	disability retirement benefits under this subsection shall be a
647	compulsory member of the Public Employee Optional Retirement
648	Program of the Florida Retirement System. The net difference
649	between the recipient's original account balance transferred to
650	the Florida Retirement System Trust Fund, including earnings,
651	under paragraph (a) and total disability benefits paid to such
652	recipient, if any, shall be determined as provided in sub-
653	subparagraph a.
654	a.  An amount equal to the total benefits paid shall be
655	subtracted from that portion of the transferred account balance
656	consisting of vested accumulations as described under s.
657	121.4501(6), if any, and an amount equal to the remainder of
658	benefit amounts paid, if any, shall then be subtracted from any
659	remaining portion consisting of nonvested accumulations as
660	described under s. 121.4501(6).
661	b.  Amounts subtracted under sub-subparagraph a. shall be
662	retained within the disability account of the Florida Retirement
663	System Trust Fund. Any remaining account balance shall be
664	transferred to the third-party administrator for disposition as
665	provided under sub-subparagraph c. or sub-subparagraph d., as
666	appropriate.
667	c.  If the recipient returns to covered employment,
668	transferred amounts shall be deposited in individual accounts
669	under the Public Employee Optional Retirement Program, as
670	directed by the participant. Vested and nonvested amounts shall
671	be separately accounted for as provided in s. 121.4501(6).
672	d.  If the recipient fails to return to covered employment
673	upon recovery from disability:
674	(I)  Any remaining vested amount shall be deposited in
675	individual accounts under the Public Employee Optional
676	Retirement Program, as directed by the participant, and shall be
677	payable as provided in subsection (1).
678	(II)  Any remaining nonvested amount shall be held in a
679	suspense account and shall be forfeitable after 5 years as
680	provided in s. 121.4501(6).
681	3.  If present value was reassigned from the defined
682	benefit program to the disability program of the Florida
683	Retirement System as provided under subparagraph (a)2., the full
684	present value amount shall be returned to the defined benefit
685	account within the Florida Retirement System Trust Fund and the
686	affected individual's associated retirement credit under the
687	defined benefit program shall be reinstated in full. Any benefit
688	based upon such credit shall be calculated as provided in s.
689	121.091(4)(h)1.
690	(l)  Nonadmissible causes of disability.--A participant
691	shall not be entitled to receive a disability retirement benefit
692	if the disability results from any injury or disease sustained
693	or inflicted as described in s. 121.091(4)(i).
694	(m)  Disability retirement of justice or judge by order of
695	Supreme Court.--
696	1.  If a participant is a justice of the Supreme Court,
697	judge of a district court of appeal, circuit judge, or judge of
698	a county court who has served for 6 years or more as an elected
699	constitutional judicial officer, including service as a judicial
700	officer in any court abolished pursuant to Art. V of the State
701	Constitution, and who is retired for disability by order of the
702	Supreme Court upon recommendation of the Judicial Qualifications
703	Commission pursuant to the provisions of Art. V of the State
704	Constitution, the participant's Option 1 monthly disability
705	benefit amount as provided in s. 121.091(6)(a)1. shall be two-
706	thirds of his or her monthly compensation as of the
707	participant's disability retirement date. Such a participant may
708	alternatively elect to receive an actuarially adjusted
709	disability retirement benefit under any other option as provided
710	in s. 121.091(6)(a), or to receive the normal benefit payable
711	under the Public Employee Optional Retirement Program as set
712	forth in subsection (1).
713	2.  If any justice or judge who is a participant of the
714	Public Employee Optional Retirement Program of the Florida
715	Retirement System is retired for disability by order of the
716	Supreme Court upon recommendation of the Judicial Qualifications
717	Commission pursuant to the provisions of Art. V of the State
718	Constitution and elects to receive a monthly disability benefit
719	under the provisions of this paragraph:
720	a.  Any present value amount that was transferred to his or
721	her program account and all employer contributions made to such
722	account on his or her behalf, plus interest and earnings
723	thereon, shall be transferred to and deposited in the disability
724	account of the Florida Retirement System Trust Fund; and
725	b.  The monthly benefits payable under this paragraph for
726	any affected justice or judge retired from the Florida
727	Retirement System pursuant to Art. V of the State Constitution
728	shall be paid from the disability account of the Florida
729	Retirement System Trust Fund.
730	(n)  Death of retiree or beneficiary.--Upon the death of a
731	disabled retiree or beneficiary thereof who is receiving monthly
732	benefits under this subsection, the monthly benefits shall be
733	paid through the last day of the month of death and shall
734	terminate, or be adjusted, if applicable, as of that date in
735	accordance with the optional form of benefit selected at the
736	time of retirement. The deceased disabled retiree's beneficiary
737	shall also receive the amount of the participant's remaining
738	account balance, if any, in the Florida Retirement System Trust
739	Fund. The Department of Management Services may adopt rules
740	necessary to administer this paragraph.
741	(3)  DEATH BENEFITS.--Under the Public Employee Optional
742	Retirement Program:
743	(a)  Survivor benefits shall be payable in accordance with
744	the following terms and conditions:
745	1.  To the extent vested, benefits shall be payable only to
746	a participant's beneficiary or beneficiaries as designated by
747	the participant. If a participant designates a primary
748	beneficiary other than the participant's spouse, the
749	participant's spouse shall be notified of the designation. This
750	requirement shall not apply to the designation of one or more
751	contingent beneficiaries to receive any benefits remaining upon
752	the death of the primary beneficiary or beneficiaries.
753	2.  Benefits shall be paid by the third-party administrator
754	or designated approved providers in accordance with the law, the
755	contracts, and any applicable board rule or policy.
756	3.  To receive benefits under this subsection, the
757	participant must be deceased.
758	(b)  In the event of a participant's death, all vested
759	accumulations as described in s. 121.4501(6), less withholding
760	taxes remitted to the Internal Revenue Service, shall be
761	distributed, as provided in paragraph (c), to the participant's
762	designated beneficiary or beneficiaries, or to the participant's
763	estate, as if the participant retired on the date of death. No
764	other death benefits shall be available for survivors of
765	participants under the Public Employee Optional Retirement
766	Program, except for such benefits, or coverage for such
767	benefits, as are otherwise provided by law or are separately
768	afforded by the employer, at the employer's discretion.
769	(c)  Upon receipt by the third-party administrator of a
770	properly executed application for distribution of benefits, the
771	total accumulated benefit shall be payable by the third-party
772	administrator to the participant's surviving beneficiary or
773	beneficiaries, as:
774	1.  A lump-sum distribution payable to the beneficiary or
775	beneficiaries, or to the deceased participant's estate;
776	2.  An eligible rollover distribution on behalf of the
777	surviving spouse of a deceased participant, whereby all accrued
778	benefits, plus interest and investment earnings, are paid from
779	the deceased participant's account directly to the custodian of
780	an eligible retirement plan, as described in s. 402(c)(8)(B) of
781	the Internal Revenue Code, on behalf of the surviving spouse; or
782	3.  A partial lump-sum payment whereby a portion of the
783	accrued benefit is paid to the deceased participant's surviving
784	spouse or other designated beneficiaries, less withholding taxes
785	remitted to the Internal Revenue Service, and the remaining
786	amount is transferred directly to the custodian of an eligible
787	retirement plan, as described in s. 402(c)(8)(B) of the Internal
788	Revenue Code, on behalf of the surviving spouse. The proportions
789	must be specified by the participant or the surviving
790	beneficiary.
791
792	This paragraph does not abrogate other applicable provisions of
793	state or federal law providing for payment of death benefits.
794	(4)  LIMITATION ON LEGAL PROCESS.--The benefits payable to
795	any person under the Public Employee Optional Retirement
796	Program, and any contributions accumulated under such program,
797	are not subject to assignment, execution, attachment, or any
798	legal process, except for qualified domestic relations orders by
799	a court of competent jurisdiction, income deduction orders as
800	provided in s. 61.1301, and federal income tax levies.
801	Section 4.  Paragraph (b) of subsection (3) of section
802	121.78, Florida Statutes, is amended to read:
803	121.78  Payment and distribution of contributions.--
804	(3)
805	(b)  If contributions made by an employer on behalf of
806	participants of the optional retirement program or accompanying
807	payroll data are not received within the calendar month they are
808	due, including, but not limited to, contribution adjustments as
809	a result of employer errors or corrections, and if that
810	delinquency results in market losses to participants, the
811	employer shall reimburse each participant's account for market
812	losses resulting from the late contributions. In the event a
813	participant has terminated employment and taken a distribution,
814	the participant is responsible for returning any excess
815	contributions erroneously provided by employers, adjusted for
816	any investment gain or loss incurred during the period such
817	excess contributions were in the participant's Public Employee
818	Optional Retirement Program account. The State Board of
819	Administration, or its designated agent, shall communicate to
820	terminated participants any obligation to repay such excess
821	contribution amounts, but the State Board of Administration, its
822	designated agent, or the Public Employee Optional Retirement
823	Program Trust Fund shall not incur any loss or gain as a result
824	of employers' correcting such excess contributions. The third-
825	party administrator, hired by the board pursuant to s.
826	121.4501(8), shall calculate the market losses for each affected
827	participant. When contributions made on behalf of participants
828	of the optional retirement program or accompanying payroll data
829	are not received within the calendar month due, the employer
830	shall also pay the cost of the third-party administrator's
831	calculation and reconciliation adjustments resulting from the
832	late contributions. The third-party administrator shall notify
833	the employer of the results of the calculations and the total
834	amount due from the employer for such losses and the costs of
835	calculation and reconciliation. The employer shall remit to the
836	division the amount due within 10 working days after the date of
837	the penalty notice sent by the division. The division shall
838	transfer said amount to the third-party administrator, who shall
839	deposit proceeds from the 1-percent assessment and from
840	individual market losses into participant accounts, as
841	appropriate. The board is authorized to adopt rules to implement
842	the provisions regarding late contributions, late submission of
843	payroll data, the process for reimbursing participant accounts
844	for resultant market losses, and the penalties charged to the
845	employers.
846	Section 5.  Paragraphs (g) and (i) of subsection (2) of
847	section 215.47, Florida Statutes, are amended to read:
848	215.47  Investments; authorized securities; loan of
849	securities.--Subject to the limitations and conditions of the
850	State Constitution or of the trust agreement relating to a trust
851	fund, moneys available for investments under ss. 215.44-215.53
852	may be invested as follows:
853	(2)  With no more than 25 percent of any fund in:
854	(g)  Fixed-income obligations not otherwise authorized by
855	this section issued by foreign governments, or political
856	subdivisions or agencies thereof, supranational agencies,
857	foreign corporations, or foreign commercial entities, provided
858	the obligations are rated investment grade by at least one
859	nationally recognized rating service General obligations backed
860	by the full faith and credit of a foreign government which has
861	not defaulted on similar obligations for a minimum period of 25
862	years prior to purchase of the obligation and has met its
863	payments of similar obligations when due.
864	(i)  Obligations of agencies of the government of the
865	United States, provided such obligations have been included in
866	and authorized by the Florida Retirement System Defined Benefit
867	Total Fund Investment Plan Investment Policy Statement
868	established in s. 215.475.
869	Section 6.  Section 215.475, Florida Statutes, is amended
870	to read:
871	215.475  Investment policy statement plan.--
872	(1)  In making investments for the System Trust Fund
873	pursuant to ss. 215.44-215.53, the board shall make no
874	investment which is not in conformance with the Florida
875	Retirement System Defined Benefit Total Fund Investment Plan
876	Investment Policy Statement, hereinafter referred to as "the
877	statement plan," as developed by the executive director and
878	approved by the board. The statement plan must include, among
879	other items, the investment objectives of the System Trust Fund;
880	permitted types of securities in which the board may invest; and
881	evaluation criteria necessary to measure the investment
882	performance of the fund. As required from time to time, the
883	executive director of the board may present recommended changes
884	in the statement plan to the board for approval.
885	(2)  Prior to any recommended changes in the statement plan
886	being presented to the board, the executive director of the
887	board shall present such changes to the Investment Advisory
888	Council for review. The council shall present the results of its
889	review to the board prior to the board's final approval of the
890	statement plan or changes in the statement plan.
891	Section 7.  Paragraph (a) of subsection (4) of section
892	215.5601, Florida Statutes, is amended to read:
893	215.5601  Lawton Chiles Endowment Fund.--
894	(4)  ADMINISTRATION.--
895	(a)  The board may invest and reinvest funds of the
896	endowment in accordance with s. 215.47 and consistent with an
897	investment policy statement plan developed by the executive
898	director and approved by the board.
899	Section 8.  This act shall take effect July 1, 2004.

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