HCS HB 1398, 1339, 1488 & 1114 -- RETIREMENT SYSTEMS

CO-SPONSORS:  Hagan-Harrell

COMMITTEE ACTION:  Voted "do pass" by the Committee on
Retirement by a vote of 7 to 0.

This substitute increases the limit on cost of living
adjustments (COLA) to public school retirement system (PSRS)
retirees' benefits to 75% of the retirement allowance
established at retirement or as otherwise adjusted by
non-COLA-related benefit increases. Currently, the COLA "cap" is
65%.  In addition, the COLA cap for nonteacher retirees' of the
system is raised from 56% to 65%.

In addition, this substitute grants any teacher who retired
prior to May 26, 1994, an increase in his or her monthly
retirement allowance equal to the lesser of $60 or $2 multiplied
by the teacher's number of years of creditable service.  Current
law grants this allowance increase only to such retirees who
receive an annual retirement allowance from the public school
retirement system of less than $24,000.

If an employee of the St. Louis public schools is involuntarily
laid off due to a staff reduction after 1980 and subsequently
returns to full-time employment in the system, the employee is
allowed to purchase a maximum of 5 years creditable service
toward retirement for the period of the layoff.  The employee
must have accumulated a minimum of 5 years continuous creditable
membership service prior to making this purchase.  The employee
will pay the costs that would have been contributed by both the
employee and the system for the period of the layoff.

Several technical revisions are made to make service credit
purchases more consistent in PSRS and the Nonteacher School
Employee Retirement System, with an effective date of July 1,
1998, for the PSRS service credit revisions.  This substitute
also revises military purchase provisions in order to conform
with the federal United Services Employment and Reemployment
Rights Act of 1994.

The option allowing members of the system to make additional
deposits to the system in excess of the amount required, and
consequently to receive correspondingly greater allowances upon
retirement, will only be available to those members who have
elected to begin such deposits prior to September 1, 1996.

For the purpose of investment, the funds in the Nonteacher
System may be combined with the funds of PSRS, but the funds for
each system will be accounted for separately and for all other
purposes will be separate.

A retired member of either PSRS or the Nonteacher System will
not need to contribute to either retirement system for any
compensation received on a temporary-substitute basis following
retirement.

The monthly retirement allowance paid by the system for the
month in which a retired member dies will be made payable to the
member rather than to the member's beneficiary.

Should a member, after leaving either system and withdrawing the
member's contributions to the system, later return to the
system, the member no longer needs to work under the system for
at least 5 years in order to reinstate the member's creditable
prior service.

A PSRS member's membership will be terminated if the member does
not earn any membership credit under the system for 5
consecutive school years, instead of for more than 4 of any 5
consecutive years as current law dictates.

FISCAL NOTE:  Cost to General Revenue Fund of $0 in FY 97, $0 or
$15,135,000 in FY 98, and $0 or $15,135,000 in FY 99.

PROPONENTS:  Supporters say that the COLA cap can be raised and
the $24,000 "salary cap" on increased benefits can be removed
without forcing an increase in the contribution rate for active
teachers.  The $24,000 cap is an arbitrary figure that
needlessly discriminates, and it can be removed at little cost
to the system.  Also, certain retirees are approaching the COLA
cap, and raising it would allow them continued cost-of-living
adjustments in their retirement benefits.

Testifying for the bill were Representatives Hagan-Harrell,
Williams (121), Franklin, and Auer; Public School Retirement
System; Retired Teachers Association; Missouri National
Education Association; Missouri State Teachers Association;
Missouri School Administrators Coalition; AARP Capitol City Task
Force; Missouri Community College Association; St. Louis
Community College; and Anna Lou Tommy, a retired teacher.

OPPONENTS:  There was no opposition voiced to the committee.

Brian Cook, Research Analyst

HB 1398 -- Public School Retirement

Sponsor:  Hagan-Harrell

In addition to making several technical revisions to make
service credit purchases more consistent in the Public School
Retirement System (PSRS) and the Nonteacher School Employee
Retirement System policy, this bill revises military purchase
provisions in order to conform with the federal United Services
Employment and Reemployment Rights Act of 1994 (USERRA).

The option allowing members of the system to make additional
deposits to the system in excess of the amount required, and
consequently to receive correspondingly greater allowances upon
retirement, will only be available to those members who have
elected to begin such deposits prior to September 1, 1996.

The board of trustees may charge interest to any employer under
either PSRS or the Nonteacher System who is delinquent in
payment of contributions, as long as the interest rate does not
exceed the actuarially assumed rate of return on invested funds
of the system.

For the purpose of investment, the funds in the Nonteacher
System may be combined with the funds of PSRS, but the funds for
each system will be accounted for separately and for all other
purposes will be separate.

A PSRS member's membership will be terminated if the member does
not earn any membership credit under the system for 5
consecutive school years, instead of for more than 4 of any 5
consecutive years as current law dictates.

A retired member of either PSRS or the Nonteacher System will
not need to contribute to either retirement system for any
compensation received on a temporary-substitute basis following
retirement.

The monthly retirement allowance paid by the system for the
month in which a retired member dies will be made payable to the
member rather than to the member's beneficiary.

Should a member, after leaving either system and withdrawing the
member's contributions to the system, later return to the
system, the member no longer needs to work under the system for
at least 5 years in order to reinstate the member's creditable
prior service.