HCS HB 1 -- PUBLIC RETIREMENT SYSTEMS

SPONSOR:  Viebrock

COMMITTEE ACTION:  Voted "do pass" by the Committee on Retirement
by a vote of 11 to 1.

This substitute changes the laws regarding public retirement
systems.

RETIREMENT SYSTEM AUDITS (Sections 29.212, 56.809, 70.605,
104.190, 104.480, and 169.020, RSMo)

The State Auditor is allowed to audit any retirement system
established by the state or any political subdivision every three
years or more frequently as otherwise required by law.

2010 STATE EMPLOYEE RETIREMENT INCENTIVE PROGRAM (Sections
104.405 - 104.406)

The 2010 State Employee Retirement Incentive Program is
established which allows any employee who has not been a retiree
of the Missouri State Employees' Retirement System (MOSERS), who
is eligible to receive a normal or life annuity and terminates
employment after reaching normal eligibility and becomes a
retiree within 60 days of the termination whose annuity commences
on or after September 1, 2010, but no later than December 1,
2010, to be eligible to receive a years of service incentive
benefit.

For eligible employees, with at least 10 years of creditable
service, the years of service incentive benefit will be an amount
equal to $1,000 for each year of creditable service up to a
maximum of 20 years of creditable service.  The state, through
the Office of Administration, will pay the benefit to the retiree
or the retiree's beneficiary in five equal installments beginning
in January 2011 and each September thereafter until all five
equal installments have been paid.  Any accrued annual leave
remaining will also be paid to the retiree or the retiree's
beneficiary in five equal installments.  An employee electing to
take this retirement incentive is prohibited from any future
employment with a state department.

The Office of Administration must submit an interim report to the
General Assembly by December 31, 2010, and an annual update for
four years thereafter regarding the number of program
participants, the cost of the program, the number of positions
not filled under the program, and the number of vacated positions
that have been filled.  MOSERS must submit a report to the
Commissioner of the Office of Administration by January 31, 2011,
regarding the number of state employees eligible to retire and
the actual number of retirements under this program.  The
commissioner must then report this information to the Governor
and General Assembly by March 31, 2011, along with a cost and
savings analysis, the payroll reduction amount, and the number of
positions that are core cut as a result of these retirements.

MISSOURI STATE EMPLOYEES' RETIREMENT SYSTEM (Sections 104.1091,
476.521, 476.529, 476.527, and Section 1)

The substitute:

(1)  Requires any person who first becomes a state employee on or
after February 1, 2011, to be a member of the Missouri State
Employees' Retirement System (MOSERS) Year 2000 Plan.  To be
eligible for normal retirement under this plan, an employee must
be at least 65 years of age and have completed at least 10 years
of credited service or be at least 55 years of age with the sum
of the member's age and credited service equaling at least 84.  A
uniformed member of the State Highway Patrol who is subject to
the mandatory retirement provisions of Section 104.081 or a
corrections officer will be required to be at least 60 years of
age or at least 55 years of age with 10 years of credited
service.  Members of the General Assembly must be at least 65
years of age and have completed at least three full biennial
assemblies or be at least 55 years of age with the sum of the
member's age and credited service equaling at least 84.
Statewide elected officials must be at least 65 years of age and
have completed at least five years of credited service or be at
least 55 years of age with the sum of the official's age and
credited service equaling at least 84.  A vested former member
must be at least 65 years of age and have completed at least 10
years of credited service.  An employee, except for a uniformed
member of the patrol or a corrections officer, will be eligible
for retirement at 60 years of age or at 55 years of age with at
least 10 years of credited service.  An employee must work for
the state for 10 years in order to be vested in the system.  A
member of this plan must contribute 4% of his or her pay to the
system.  A member will not be able to purchase credit in the
system for his or her previous non-federal, full-time public
employment or military service or transfer credit from another
public retirement system.  The employee contribution rate, the
benefits under the Year 2000 Plan, and any other provision of the
Year 2000 Plan may be altered, amended, increased, decreased, or
repealed, but the change will only apply to service or interest
credits after the effective date of the change.  An employee
under the plan will not be eligible for the backdrop option;

(2)  Requires any person who first becomes a judge on or after
February 1, 2011, to be at least 65 years of age and have at
least 12 years of service or be at least 62 years of age and have
at least 20 years of service before he or she is eligible for
normal retirement benefits under the Judicial Plan with MOSERS.
If a judge retires at 67 years of age with less than 12 years of
service or at 60 years of age with less than 20 years of service,
his or her retirement compensation will be reduced
proportionately.  A judge in this plan will be required to
contribute 4% of his or her compensation to the system.  A judge
will not be able to purchase credit in the retirement plan for
his or her previous non-federal, full-time public employment or
military service.  A judge under this plan who continues to work
after his or her normal retirement date will not have
cost-of-living increases added to his or her retirement
compensation for the period of time between his or her
eligibility for retirement and the actual retirement date.  When
a retired judge under this plan dies, his or her beneficiary will
not receive an amount equal to 50% of the judge's retirement
compensation.  Instead, he or she will make a choice at
retirement regarding benefit payment options including the amount
received by the beneficiary.  The employee contribution rate, the
benefits under the plan, and any other provision of the plan may
be altered, amended, increased, decreased, or repealed, but the
change will only apply to service or interest credits after the
effective date of the change;

(3)  Prohibits a retired judge who becomes employed on or after
February 1, 2011, as an employee eligible to participate in the
MOSERS Year 2000 Plan from receiving judicial retirement benefits
while employed.  Any judge who serves as a judge while receiving
judicial retirement is prohibited from receiving judicial
retirement while serving as a judge.  A judge who serves as a
senior judge or senior commissioner while receiving judicial
retirement will continue to receive judicial retirement and
additional credit and salary for the service; and

(4)  Prohibits any person within the second degree of
consanguinity or affinity of a current board member of MOSERS
from being employed by, volunteering with, acting as a lobbyist
or consultant for, or otherwise being engaged in any employment
activity with MOSERS.

STATE EMPLOYEE DEFERRED COMPENSATION PROGRAM (Sections 105.915
and 105.927)

Beginning September 1, 2010, the substitute makes enrollment in
the State Deferred Compensation Program automatic for each
eligible new employee hired, except an employee of a state
college or university.  Contributions to the program will be
effective on or after the first day of the month following the
date of hire, and the contributions must be at least $25 per
month.  An employee may change his or her contribution amount or
opt out of the program at any time.  The contribution rate for
employees automatically enrolled will automatically adjust based
on any increases in the state matching contribution, currently
$35 per month.

A member's surviving spouse will automatically be designated as
the primary beneficiary, unless the surviving spouse consented in
writing to allow the participating member to designate someone
else as the beneficiary.  The automatic beneficiary designation
does not apply to designations made prior to September 1, 2010.

The State Treasurer may credit funds for qualified participants
through a local payroll system.

FISCAL NOTE:  Estimated Income on General Revenue Fund of Less
than $18,494,101 in FY 2011, Less than $24,542,272 in FY 2012,
and Less than $30,406,979 in FY 2013.  Estimated Income on Other
State Funds of Less than $6,448,324 in FY 2011, Less than
$13,716,275 in FY 2012, and Less than $20,867,274 in FY 2013.

PROPONENTS:  Supporters say that the substitute will be good for
the state and helps guarantee that the retirement system will be
able to move forward and become more viable.  By making these
changes, the system will be able to become better funded.  Other
supporters say that they dislike the investment board language
and are glad that it is not included in the substitute.

Testifying for the bill were Representative Viebrock; Walter
Cochran, Missouri Retired Teachers Association; and Public School
Retirement System of Missouri.

OPPONENTS:  Those who oppose the substitute say that it is not
right to cut pension benefits for higher education employees in
MOSERS and the budget needs to be balanced other ways.  Others
say that they dislike the current language allowing MOSERS to
invest for other pension funds without any membership on the
board relating to investments.

Testifying against the substitute were Missouri National
Education Association; Missouri Department of Transportation and
Highway Patrol Employees' Retirement System; and Missouri State
Troopers Association.

OTHERS:  Others testifying on the substitute say it is a positive
step toward ensuring the soundness of MOSERS.  MOSERS has proven
that it can get a better rate of return than other pension funds.

Testifying on the substitute were Office of Administration; and
Gary Gross, Missouri Corrections Officers Association.

Missouri House of Representatives
95th General Assembly, 1st Special Session
Last Updated August 13, 2010 at 9:52 am