HB 1317

1
A bill to be entitled
2An act relating to the Florida Retirement System DROP
3Program; amending s. 121.091, F.S.; including among
4eligible participants pre-kindergarten instructional
5personnel; providing an effective date.
6
7Be It Enacted by the Legislature of the State of Florida:
8
9     Section 1.  Subsection (13) of section 121.091, Florida
10Statutes, is amended to read:
11     121.091  Benefits payable under the system.--Benefits may
12not be paid under this section unless the member has terminated
13employment as provided in s. 121.021(39)(a) or begun
14participation in the Deferred Retirement Option Program as
15provided in subsection (13), and a proper application has been
16filed in the manner prescribed by the department. The department
17may cancel an application for retirement benefits when the
18member or beneficiary fails to timely provide the information
19and documents required by this chapter and the department's
20rules. The department shall adopt rules establishing procedures
21for application for retirement benefits and for the cancellation
22of such application when the required information or documents
23are not received.
24     (13)  DEFERRED RETIREMENT OPTION PROGRAM.--In general, and
25subject to the provisions of this section, the Deferred
26Retirement Option Program, hereinafter referred to as the DROP,
27is a program under which an eligible member of the Florida
28Retirement System may elect to participate, deferring receipt of
29retirement benefits while continuing employment with his or her
30Florida Retirement System employer. The deferred monthly
31benefits shall accrue in the System Trust Fund on behalf of the
32participant, plus interest compounded monthly, for the specified
33period of the DROP participation, as provided in paragraph (c).
34Upon termination of employment, the participant shall receive
35the total DROP benefits and begin to receive the previously
36determined normal retirement benefits. Participation in the DROP
37does not guarantee employment for the specified period of DROP.
38Participation in the DROP by an eligible member beyond the
39initial 60-month period as authorized in this subsection shall
40be on an annual contractual basis for all participants.
41     (a)  Eligibility of member to participate in the DROP.--All
42active Florida Retirement System members in a regularly
43established position, and all active members of either the
44Teachers' Retirement System established in chapter 238 or the
45State and County Officers' and Employees' Retirement System
46established in chapter 122 which systems are consolidated within
47the Florida Retirement System under s. 121.011, are eligible to
48elect participation in the DROP provided that:
49     1.  The member is not a renewed member of the Florida
50Retirement System under s. 121.122, or a member of the State
51Community College System Optional Retirement Program under s.
52121.051, the Senior Management Service Optional Annuity Program
53under s. 121.055, or the optional retirement program for the
54State University System under s. 121.35.
55     2.  Except as provided in subparagraph 6., election to
56participate is made within 12 months immediately following the
57date on which the member first reaches normal retirement date,
58or, for a member who reaches normal retirement date based on
59service before he or she reaches age 62, or age 55 for Special
60Risk Class members, election to participate may be deferred to
61the 12 months immediately following the date the member attains
6257, or age 52 for Special Risk Class members. For a member who
63first reached normal retirement date or the deferred eligibility
64date described above prior to the effective date of this
65section, election to participate shall be made within 12 months
66after the effective date of this section. A member who fails to
67make an election within such 12-month limitation period shall
68forfeit all rights to participate in the DROP. The member shall
69advise his or her employer and the division in writing of the
70date on which the DROP shall begin. Such beginning date may be
71subsequent to the 12-month election period, but must be within
72the 60-month or, with respect to members who are instructional
73personnel employed by the Florida School for the Deaf and the
74Blind and who have received authorization by the Board of
75Trustees of the Florida School for the Deaf and the Blind to
76participate in the DROP beyond 60 months, or who are
77instructional personnel as defined in s. 1012.01(2)(a)-(d) in
78grades pre-K through 12 K-12 and who have received authorization
79by the district school superintendent to participate in the DROP
80beyond 60 months, the 96-month limitation period as provided in
81subparagraph (b)1. When establishing eligibility of the member
82to participate in the DROP for the 60-month or, with respect to
83members who are instructional personnel employed by the Florida
84School for the Deaf and the Blind and who have received
85authorization by the Board of Trustees of the Florida School for
86the Deaf and the Blind to participate in the DROP beyond 60
87months, or who are instructional personnel as defined in s.
881012.01(2)(a)-(d) in grades pre-K through 12 K-12 and who have
89received authorization by the district school superintendent to
90participate in the DROP beyond 60 months, the 96-month maximum
91participation period, the member may elect to include or exclude
92any optional service credit purchased by the member from the
93total service used to establish the normal retirement date. A
94member with dual normal retirement dates shall be eligible to
95elect to participate in DROP within 12 months after attaining
96normal retirement date in either class.
97     3.  The employer of a member electing to participate in the
98DROP, or employers if dually employed, shall acknowledge in
99writing to the division the date the member's participation in
100the DROP begins and the date the member's employment and DROP
101participation will terminate.
102     4.  Simultaneous employment of a participant by additional
103Florida Retirement System employers subsequent to the
104commencement of participation in the DROP shall be permissible
105provided such employers acknowledge in writing a DROP
106termination date no later than the participant's existing
107termination date or the 60-month limitation period as provided
108in subparagraph (b)1.
109     5.  A DROP participant may change employers while
110participating in the DROP, subject to the following:
111     a.  A change of employment must take place without a break
112in service so that the member receives salary for each month of
113continuous DROP participation. If a member receives no salary
114during a month, DROP participation shall cease unless the
115employer verifies a continuation of the employment relationship
116for such participant pursuant to s. 121.021(39)(b).
117     b.  Such participant and new employer shall notify the
118division on forms required by the division as to the identity of
119the new employer.
120     c.  The new employer shall acknowledge, in writing, the
121participant's DROP termination date, which may be extended but
122not beyond the original 60-month or, with respect to members who
123are instructional personnel employed by the Florida School for
124the Deaf and the Blind and who have received authorization by
125the Board of Trustees of the Florida School for the Deaf and the
126Blind to participate in the DROP beyond 60 months, or who are
127instructional personnel as defined in s. 1012.01(2)(a)-(d) in
128grades pre-K through 12 K-12 and who have received authorization
129by the district school superintendent to participate in the DROP
130beyond 60 months, the 96-month period provided in subparagraph
131(b)1., shall acknowledge liability for any additional retirement
132contributions and interest required if the participant fails to
133timely terminate employment, and shall be subject to the
134adjustment required in sub-subparagraph (c)5.d.
135     6.  Effective July 1, 2001, for instructional personnel as
136defined in s. 1012.01(2), election to participate in the DROP
137shall be made at any time following the date on which the member
138first reaches normal retirement date. The member shall advise
139his or her employer and the division in writing of the date on
140which the Deferred Retirement Option Program shall begin. When
141establishing eligibility of the member to participate in the
142DROP for the 60-month or, with respect to members who are
143instructional personnel employed by the Florida School for the
144Deaf and the Blind and who have received authorization by the
145Board of Trustees of the Florida School for the Deaf and the
146Blind to participate in the DROP beyond 60 months, or who are
147instructional personnel as defined in s. 1012.01(2)(a)-(d) in
148grades pre-K through 12 K-12 and who have received authorization
149by the district school superintendent to participate in the DROP
150beyond 60 months, the 96-month maximum participation period, as
151provided in subparagraph (b)1., the member may elect to include
152or exclude any optional service credit purchased by the member
153from the total service used to establish the normal retirement
154date. A member with dual normal retirement dates shall be
155eligible to elect to participate in either class.
156     (b)  Participation in the DROP.--
157     1.  An eligible member may elect to participate in the DROP
158for a period not to exceed a maximum of 60 calendar months or,
159with respect to members who are instructional personnel employed
160by the Florida School for the Deaf and the Blind and who have
161received authorization by the Board of Trustees of the Florida
162School for the Deaf and the Blind to participate in the DROP
163beyond 60 months, or who are instructional personnel as defined
164in s. 1012.01(2)(a)-(d) in grades pre-K through 12 K-12 and who
165have received authorization by the district school
166superintendent to participate in the DROP beyond 60 calendar
167months, 96 calendar months immediately following the date on
168which the member first reaches his or her normal retirement date
169or the date to which he or she is eligible to defer his or her
170election to participate as provided in subparagraph (a)2.
171However, a member who has reached normal retirement date prior
172to the effective date of the DROP shall be eligible to
173participate in the DROP for a period of time not to exceed 60
174calendar months or, with respect to members who are
175instructional personnel employed by the Florida School for the
176Deaf and the Blind and who have received authorization by the
177Board of Trustees of the Florida School for the Deaf and the
178Blind to participate in the DROP beyond 60 months, or who are
179instructional personnel as defined in s. 1012.01(2)(a)-(d) in
180grades pre-K through 12 K-12 and who have received authorization
181by the district school superintendent to participate in the DROP
182beyond 60 calendar months, 96 calendar months immediately
183following the effective date of the DROP, except a member of the
184Special Risk Class who has reached normal retirement date prior
185to the effective date of the DROP and whose total accrued value
186exceeds 75 percent of average final compensation as of his or
187her effective date of retirement shall be eligible to
188participate in the DROP for no more than 36 calendar months
189immediately following the effective date of the DROP.
190     2.  Upon deciding to participate in the DROP, the member
191shall submit, on forms required by the division:
192     a.  A written election to participate in the DROP;
193     b.  Selection of the DROP participation and termination
194dates, which satisfy the limitations stated in paragraph (a) and
195subparagraph 1. Such termination date shall be in a binding
196letter of resignation with the employer, establishing a deferred
197termination date. The member may change the termination date
198within the limitations of subparagraph 1., but only with the
199written approval of his or her employer;
200     c.  A properly completed DROP application for service
201retirement as provided in this section; and
202     d.  Any other information required by the division.
203     3.  The DROP participant shall be a retiree under the
204Florida Retirement System for all purposes, except for paragraph
205(5)(f) and subsection (9) and ss. 112.3173, 112.363, 121.053,
206and 121.122. However, participation in the DROP does not alter
207the participant's employment status and such employee shall not
208be deemed retired from employment until his or her deferred
209resignation is effective and termination occurs as provided in
210s. 121.021(39).
211     4.  Elected officers shall be eligible to participate in
212the DROP subject to the following:
213     a.  An elected officer who reaches normal retirement date
214during a term of office may defer the election to participate in
215the DROP until the next succeeding term in that office. Such
216elected officer who exercises this option may participate in the
217DROP for up to 60 calendar months or a period of no longer than
218such succeeding term of office, whichever is less.
219     b.  An elected or a nonelected participant may run for a
220term of office while participating in DROP and, if elected,
221extend the DROP termination date accordingly, except, however,
222if such additional term of office exceeds the 60-month
223limitation established in subparagraph 1., and the officer does
224not resign from office within such 60-month limitation, the
225retirement and the participant's DROP shall be null and void as
226provided in sub-subparagraph (c)5.d.
227     c.  An elected officer who is dually employed and elects to
228participate in DROP shall be required to satisfy the definition
229of termination within the 60-month or, with respect to members
230who are instructional personnel employed by the Florida School
231for the Deaf and the Blind and who have received authorization
232by the Board of Trustees of the Florida School for the Deaf and
233the Blind to participate in the DROP beyond 60 months, or who
234are instructional personnel as defined in s. 1012.01(2)(a)-(d)
235in grades pre-K through 12 K-12 and who have received
236authorization by the district school superintendent to
237participate in the DROP beyond 60 months, the 96-month
238limitation period as provided in subparagraph 1. for the
239nonelected position and may continue employment as an elected
240officer as provided in s. 121.053. The elected officer will be
241enrolled as a renewed member in the Elected Officers' Class or
242the Regular Class, as provided in ss. 121.053 and 121.122, on
243the first day of the month after termination of employment in
244the nonelected position and termination of DROP. Distribution of
245the DROP benefits shall be made as provided in paragraph (c).
246     (c)  Benefits payable under the DROP.--
247     1.  Effective with the date of DROP participation, the
248member's initial normal monthly benefit, including creditable
249service, optional form of payment, and average final
250compensation, and the effective date of retirement shall be
251fixed. The beneficiary established under the Florida Retirement
252System shall be the beneficiary eligible to receive any DROP
253benefits payable if the DROP participant dies prior to the
254completion of the period of DROP participation. In the event a
255joint annuitant predeceases the member, the member may name a
256beneficiary to receive accumulated DROP benefits payable. Such
257retirement benefit, the annual cost of living adjustments
258provided in s. 121.101, and interest shall accrue monthly in the
259System Trust Fund. Such interest shall accrue at an effective
260annual rate of 6.5 percent compounded monthly, on the prior
261month's accumulated ending balance, up to the month of
262termination or death.
263     2.  Each employee who elects to participate in the DROP
264shall be allowed to elect to receive a lump-sum payment for
265accrued annual leave earned in accordance with agency policy
266upon beginning participation in the DROP. Such accumulated leave
267payment certified to the division upon commencement of DROP
268shall be included in the calculation of the member's average
269final compensation. The employee electing such lump-sum payment
270upon beginning participation in DROP will not be eligible to
271receive a second lump-sum payment upon termination, except to
272the extent the employee has earned additional annual leave which
273combined with the original payment does not exceed the maximum
274lump-sum payment allowed by the employing agency's policy or
275rules. Such early lump-sum payment shall be based on the hourly
276wage of the employee at the time he or she begins participation
277in the DROP. If the member elects to wait and receive such lump-
278sum payment upon termination of DROP and termination of
279employment with the employer, any accumulated leave payment made
280at that time cannot be included in the member's retirement
281benefit, which was determined and fixed by law when the employee
282elected to participate in the DROP.
283     3.  The effective date of DROP participation and the
284effective date of retirement of a DROP participant shall be the
285first day of the month selected by the member to begin
286participation in the DROP, provided such date is properly
287established, with the written confirmation of the employer, and
288the approval of the division, on forms required by the division.
289     4.  Normal retirement benefits and interest thereon shall
290continue to accrue in the DROP until the established termination
291date of the DROP, or until the participant terminates employment
292or dies prior to such date. Although individual DROP accounts
293shall not be established, a separate accounting of each
294participant's accrued benefits under the DROP shall be
295calculated and provided to participants.
296     5.  At the conclusion of the participant's DROP, the
297division shall distribute the participant's total accumulated
298DROP benefits, subject to the following provisions:
299     a.  The division shall receive verification by the
300participant's employer or employers that such participant has
301terminated employment as provided in s. 121.021(39)(b).
302     b.  The terminated DROP participant or, if deceased, such
303participant's named beneficiary, shall elect on forms provided
304by the division to receive payment of the DROP benefits in
305accordance with one of the options listed below. For a
306participant or beneficiary who fails to elect a method of
307payment within 60 days of termination of the DROP, the division
308will pay a lump sum as provided in sub-sub-subparagraph (I).
309     (I)  Lump sum.--All accrued DROP benefits, plus interest,
310less withholding taxes remitted to the Internal Revenue Service,
311shall be paid to the DROP participant or surviving beneficiary.
312     (II)  Direct rollover.--All accrued DROP benefits, plus
313interest, shall be paid from the DROP directly to the custodian
314of an eligible retirement plan as defined in s. 402(c)(8)(B) of
315the Internal Revenue Code. However, in the case of an eligible
316rollover distribution to the surviving spouse of a deceased
317participant, an eligible retirement plan is an individual
318retirement account or an individual retirement annuity as
319described in s. 402(c)(9) of the Internal Revenue Code.
320     (III)  Partial lump sum.--A portion of the accrued DROP
321benefits shall be paid to the DROP participant or surviving
322spouse, less withholding taxes remitted to the Internal Revenue
323Service, and the remaining DROP benefits shall be transferred
324directly to the custodian of an eligible retirement plan as
325defined in s. 402(c)(8)(B) of the Internal Revenue Code.
326However, in the case of an eligible rollover distribution to the
327surviving spouse of a deceased participant, an eligible
328retirement plan is an individual retirement account or an
329individual retirement annuity as described in s. 402(c)(9) of
330the Internal Revenue Code. The proportions shall be specified by
331the DROP participant or surviving beneficiary.
332     c.  The form of payment selected by the DROP participant or
333surviving beneficiary complies with the minimum distribution
334requirements of the Internal Revenue Code.
335     d.  A DROP participant who fails to terminate employment as
336defined in s. 121.021(39)(b) shall be deemed not to be retired,
337and the DROP election shall be null and void. Florida Retirement
338System membership shall be reestablished retroactively to the
339date of the commencement of the DROP, and each employer with
340whom the participant continues employment shall be required to
341pay to the System Trust Fund the difference between the DROP
342contributions paid in paragraph (i) and the contributions
343required for the applicable Florida Retirement System class of
344membership during the period the member participated in the
345DROP, plus 6.5 percent interest compounded annually.
346     6.  The accrued benefits of any DROP participant, and any
347contributions accumulated under such program, shall not be
348subject to assignment, execution, attachment, or to any legal
349process whatsoever, except for qualified domestic relations
350orders by a court of competent jurisdiction, income deduction
351orders as provided in s. 61.1301, and federal income tax levies.
352     7.  DROP participants shall not be eligible for disability
353retirement benefits as provided in subsection (4).
354     (d)  Death benefits under the DROP.--
355     1.  Upon the death of a DROP participant, the named
356beneficiary shall be entitled to apply for and receive the
357accrued benefits in the DROP as provided in sub-subparagraph
358(c)5.b.
359     2.  The normal retirement benefit accrued to the DROP
360during the month of a participant's death shall be the final
361monthly benefit credited for such DROP participant.
362     3.  Eligibility to participate in the DROP terminates upon
363death of the participant. If the participant dies on or after
364the effective date of enrollment in the DROP, but prior to the
365first monthly benefit being credited to the DROP, Florida
366Retirement System benefits shall be paid in accordance with
367subparagraph (7)(c)1. or subparagraph 2.
368     4.  A DROP participants' survivors shall not be eligible to
369receive Florida Retirement System death benefits as provided in
370paragraph (7)(d).
371     (e)  Cost-of-living adjustment.--On each July 1, the
372participants' normal retirement benefit shall be increased as
373provided in s. 121.101.
374     (f)  Retiree health insurance subsidy.--DROP participants
375are not eligible to apply for the retiree health insurance
376subsidy payments as provided in s. 112.363 until such
377participants have terminated employment and participation in the
378DROP.
379     (g)  Renewed membership.--DROP participants shall not be
380eligible for renewed membership in the Florida Retirement System
381under ss. 121.053 and 121.122 until termination of employment is
382effectuated as provided in s. 121.021(39)(b).
383     (h)  Employment limitation after DROP participation.--Upon
384satisfying the definition of termination of employment as
385provided in s. 121.021(39)(b), DROP participants shall be
386subject to such reemployment limitations as other retirees.
387Reemployment restrictions applicable to retirees as provided in
388subsection (9) shall not apply to DROP participants until their
389employment and participation in the DROP are terminated.
390     (i)  Contributions.--
391     1.  All employers paying the salary of a DROP participant
392filling a regularly established position shall contribute 8.0
393percent of such participant's gross compensation for the period
394of July 1, 2002, through June 30, 2003, and 11.56 percent of
395such compensation thereafter, which shall constitute the entire
396employer DROP contribution with respect to such participant.
397Such contributions, payable to the System Trust Fund in the same
398manner as required in s. 121.071, shall be made as appropriate
399for each pay period and are in addition to contributions
400required for social security and the Retiree Health Insurance
401Subsidy Trust Fund. Such employer, social security, and health
402insurance subsidy contributions are not included in the DROP.
403     2.  The employer shall, in addition to subparagraph 1.,
404also withhold one-half of the entire social security
405contribution required for the participant. Contributions for
406social security by each participant and each employer, in the
407amount required for social security coverage as now or hereafter
408provided by the federal Social Security Act, shall be in
409addition to contributions specified in subparagraph 1.
410     3.  All employers paying the salary of a DROP participant
411filling a regularly established position shall contribute the
412percent of such participant's gross compensation required in s.
413121.071(4), which shall constitute the employer's health
414insurance subsidy contribution with respect to such participant.
415Such contributions shall be deposited by the administrator in
416the Retiree Health Insurance Subsidy Trust Fund.
417     (j)  Forfeiture of retirement benefits.--Nothing in this
418section shall be construed to remove DROP participants from the
419scope of s. 8(d), Art. II of the State Constitution, s.
420112.3173, and paragraph (5)(f). DROP participants who commit a
421specified felony offense while employed will be subject to
422forfeiture of all retirement benefits, including DROP benefits,
423pursuant to those provisions of law.
424     (k)  Administration of program.--The division shall make
425such rules as are necessary for the effective and efficient
426administration of this subsection. The division shall not be
427required to advise members of the federal tax consequences of an
428election related to the DROP but may advise members to seek
429independent advice.
430     Section 2.  This act shall take effect July 1, 2008.


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