HCS SB 922 -- RETIREMENT BENEFITS

SPONSOR: Scott (Hagan-Harrell)

COMMITTEE ACTION: Voted "do pass" by the Committee on Retirement by a vote of 7 to 4.

This substitute makes changes to several public employee retirement systems.

ST. LOUIS FIRE

Currently, the maximum widow's benefit is 50% of the member's final compensation or $200, whichever is greater; the $200 maximum is changed to 75% of the poverty level. Retired members who receive less than $350 monthly are now given an additional payment to bring the total up to $350. The substitute changes the $350 figure to 100% of the poverty level.

MOSERS AND HIGHWAYS/HIGHWAY PATROL

The multiplier for the existing (closed) system is raised from 1.6 to 1.7.

TEACHER AND NONTEACHER RETIREMENT SYSTEMS

The 4 teacher and nonteacher retirement systems are directed to promulgate joint rules for recognition of service toward retirement eligibility. Such rules are prohibited from permitting transfer of creditable service or system assets. Proposed rules and changes must be filed with the Joint Committee on Public Employee Retirement at least 30 days before a retirement board meeting.

KANSAS CITY PUBLIC SCHOOL RETIREMENT SYSTEM

The substitute adds to the charter school employee statute (Section 160.420, RSMo) a statement that charter school employees will be considered public school employees for purposes of retirement. If a school system lapses, charter school personnel will continue to participate in the retirement system as they did before the lapse. Definitions of "charter school" and "employee" are added to the Kansas City school retirement system, and the governing board of a charter school is added to the definition of "employer's board." The list of contingencies faced by the retirement system is changed to include the lapse of the district's corporate structure, and the substitute clarifies that the retirement system will continue to be governed by existing statute and rule. Requirements about the board are revised to anticipate the loss of members appointed by the school board. The transfer of assets or merger of the retirement system upon lapse of the district without board approval is prohibited. The current limit of 530 hours on reemployment after retirement without loss of benefits is raised to 600 hours.

ST. LOUIS PUBLIC SCHOOL RETIREMENT SYSTEM

A definition of "charter school" is added, and the definition of "employee" is revised to clarify the status of charter school employees.

ST. LOUIS POLICE

Most of the changes are technical, making terminology consistent, updating out-of-date references, and eliminating obsolete provisions. Among its more substantive changes are the following:

(1) Clarifying the definition of "earnable compensation," adding specifics about included and excluded elements;

(2) Clarifying how the benefit cap is applied;

(3) For the surviving spouse of a deceased member, including one who is receiving special consultant benefits, stipulating that the benefits run until the earlier of the spouse's death or remarriage and specifying that benefits for the surviving spouse of a member who died in service after age 55 or 20 years of service will be increased in the same manner as the service retirement allowance of a retired member; and

(4) Clarifying the effect of reemployment on the distribution of a member's individual account.

KANSAS CITY POLICE AND CIVILIAN SYSTEMS

(1) POLICE SYSTEM. The Kansas City police pension will be 2.5% on service after August 28, 2000, and continues to be 2% on service before that date; members may make a payment of 1% aggregate compensation for the earlier service to qualify for the higher rate. The minimum police pension and surviving spouse benefit will be $600, before supplemental benefits and cost-of-living adjustments (COLAs) and must not exceed 75% rather than 60% of final compensation. Currently, the $600 is calculated as an aggregate figure which includes the COLA. The minimum is to be paid instead of the member's base pension as increased by any COLAs until the point at which the base plus COLAs exceeds $600. The remarriage prohibition is removed from surviving spouse benefits, and the substitute clarifies that a surviving spouse who remarried before August 28, 2000, will not receive a benefit and that a surviving spouse must have been married to the member at the time of retirement or death in service. Surviving spouses of members who retired or died before August 28, 1997, must have been married to the member for 2 years before retirement or death to receive benefits, except for a member who died in the line of duty or as a result of occupational disease.

(2) CIVILIAN EMPLOYEE SYSTEM. The substitute requires that votes of the retirement board have 5, rather than 4, members in favor to pass a motion.

(3) BOTH SYSTEMS. Rather than basing COLAs on the consumer price index, the retirement board may determine the amount, subject to a 3% cap. Technical provisions concerning resolutions for payment for services, supplies and routine business items are supplied, and a member's or beneficiary's request to direct a portion of a benefit to an insurance premium, for example, will not be considered an assignment of benefits.

JUDICIAL

Starting September 1, 2000, judges who retired before August 28, 1995, may become special consultants who will have their retirement benefits recalculated to incorporate all annual cost-of-living increases that retired judges received between any judge's eligibility for retirement and actual retirement.

LAGERS

The substitute:

(1) Authorizes the retirement board to hold administrative hearings and appoint a hearing officer to preside at the hearings. The hearing officer will hear evidence and make findings of fact and may recommend action to the board. At least 4 board members must approve any final action in writing; and board members who were not present for the hearing must certify that they have read the entire transcript and reviewed all exhibits;

(2) Removes references to attainment of the minimum Social Security age from 3 benefit options that provide a temporary benefit for retirees younger than age 62; deletes reference to positions not covered or no longer covered by Social Security from benefit L-6 and creates a new benefit option to cover positions not covered or no longer covered by Social Security;

(3) Changes the calculation of retirement benefits for a surviving spouse to be as if the member retired on the first of the month following the member's death instead of the actual date of death; deletes the requirement that the spouse must have been living with the member; and for members who died from a non-duty-related accident, removes the 2-year marriage requirement. Currently, if a member dies in the course of duty, the spouse's benefit is calculated as if the member had served until the age of 60; this is changed to age 60 or the date by which the member would have acquired 5 years of credited service, whichever is later. The spouse must have been married to the member on the date of injury or onset of duty- related disease;

(4) Removes the requirement that the surviving spouse of a former vested member must be living with the member and removes the mandatory 120-month maximum benefit for surviving spouses less than 40 years of age; and

(5) Deletes the maximum benefit calculation for a disability recipient under minimum retirement age and reworks the section that currently covers death benefits and disability retirement by deleting reference to death benefits and including remuneration for any gainful employment in the calculation for maximum disability benefits. Disability is to be calculated monthly.

CERF

This substitute adds a new section to the County Employees' Retirement Fund that prevents benefits, including those from a defined contribution account and deferred compensation, from execution, attachment, garnishment, domestic relations orders, and certain other claims and legal processes. Benefits are declared unassignable except as the CERF plan provides elsewhere; however, child support and maintenance may be withheld. The attachment statute is revised to include deferred compensation plans of the state and its political subdivisions as exempt from attachment.

FISCAL NOTE: Cost to All State Funds of $11,664,115 in FY 2001, $13,996,938 in FY 2002, and $13,966,938 in FY 2003. Estimated Net Cost to Highway Fund of $6,319,000 in FY 2001, $7,582,800 in FY 2002, and $7,582,800 in FY 2003.

PROPONENTS: Supporters say that retired St. Louis fire fighters and widows of firefighters need an increase to their minimum benefit.

Testifying for the bill was Senator Scott.

OPPONENTS: There was no opposition voiced to the committee.

Becky DeNeve, Senior Legislative Analyst