PRIOR PRINTER'S NOS. 311, 615, 1081,          PRINTER'S NO. 1905
        1749

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 26 Session of 2001


        INTRODUCED BY STRITTMATTER, LUCYK, SCHULER, ARMSTRONG, BUNT,
           CALTAGIRONE, CAPPABIANCA, CURRY, GEORGE, GODSHALL, HENNESSEY,
           HERSHEY, LESCOVITZ, STAIRS, E. Z. TAYLOR, THOMAS, TIGUE,
           TULLI, YOUNGBLOOD, PISTELLA, WILT, GEIST, R. MILLER, HORSEY,
           STEELMAN, L. I. COHEN, WATERS, FRANKEL AND WASHINGTON,
           JANUARY 31, 2001

        AMENDMENTS TO SENATE AMENDMENTS, HOUSE OF REPRESENTATIVES,
           MAY 8, 2001

                                     AN ACT

     1  Amending Titles 24 (Education) and 71 (State Government) of the   <--
     2     Pennsylvania Consolidated Statutes, further providing for
     3     mandatory and optional membership, for credited school
     4     service, for termination of annuities, for membership of the
     5     Public School Employees' Retirement Board and the State
     6     Employees' Retirement Board, for administrative duties of
     7     board and for management of fund and accounts.
     8  AMENDING TITLES 24 (EDUCATION) AND 71 (STATE GOVERNMENT) OF THE   <--
     9     PENNSYLVANIA CONSOLIDATED STATUTES, FURTHER PROVIDING FOR
    10     PUBLIC SCHOOL EMPLOYEES' RETIREMENT AND STATE EMPLOYEES'
    11     RETIREMENT; DEFINING TERMS; PROVIDING FOR ADDITIONAL OPTIONAL
    12     CLASSIFICATIONS FOR EXISTING MEMBERS, FOR NEW CLASSIFICATIONS
    13     FOR PROSPECTIVE MEMBERS AND FOR HEALTH INSURANCE FOR RETIRED
    14     SCHOOL EMPLOYEES; AND FURTHER PROVIDING FOR CREDIBLE SCHOOL
    15     AND STATE SERVICE, FOR CREDIBLE NONSCHOOL AND NONSTATE
    16     SERVICE, FOR ELIGIBILITY, FOR VESTING, FOR REGULAR MEMBER
    17     CONTRIBUTIONS, FOR RETURN TO SERVICE, FOR PAYMENTS BY
    18     EMPLOYERS AND THE COMMONWEALTH, FOR TERMINATION OF ANNUITIES,
    19     FOR ACTUARIAL COST METHODS, FOR MEMBER OPTIONS, FOR FUNDING
    20     OF SUPPLEMENTAL ANNUITIES, FOR ADMINISTRATION, FOR REPORTS TO
    21     AGENCIES AND MEMBERS, FOR APPLICATIONS AND ELECTIONS, FOR THE
    22     COMPOSITION OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD
    23     AND OF THE STATE EMPLOYEES' RETIREMENT BOARD, FOR INVESTMENT
    24     POWERS OF THE BOARDS, FOR MANAGEMENT OF FUNDS AND ACCOUNTS
    25     AND FOR ENFORCEMENT OFFICERS' BENEFIT AND SUPPLEMENTAL
    26     ANNUITY ACCOUNTS.

    27     The General Assembly of the Commonwealth of Pennsylvania

     1  hereby enacts as follows:
     2     Section 1.  Sections 8301, 8302(a), 8346, 8501(a) and (b),     <--
     3  8502(g), 8521(h), (i) and (j) of Title 24 of the Pennsylvania
     4  Consolidated Statutes are amended to read:
     5  § 8301.  Mandatory and optional membership.
     6     (a)  Mandatory membership.--Membership in the system shall be
     7  mandatory as of the effective date of employment for all school
     8  employees except the following:
     9         (1)  Any officer or employee of the Department of
    10     Education, State-owned educational institutions, community
    11     colleges, area vocational-technical schools, technical
    12     institutes, or the Pennsylvania State University and who is a
    13     member of the State Employees' Retirement System or a member
    14     of another retirement program approved by the employer.
    15         (2)  Any school employee who is employed on a per diem or
    16     hourly basis for less than 80 full-day sessions or 500 hours
    17     in any fiscal year or annuitant who returns to school service
    18     under the provisions of section 8346(b) (relating to
    19     termination of annuities).
    20         (3)  Any officer or employee of a governmental entity who
    21     subsequent to December 22, 1965 and prior to July 1, 1975
    22     administers, supervises, or teaches classes financed wholly
    23     or in part by the Federal Government so long as he continues
    24     in such service.
    25         (4)  Any part-time school employee who has an individual
    26     retirement account pursuant to the Federal act of September
    27     2, 1974 (Public Law 93-406, 88 Stat. 829), known as the
    28     Employee Retirement Income Security Act of 1974.
    29         (5)  Employees of a charter school, as defined in Article
    30     XVII-A of the act of March 10, 1949 (P.L.30, No.14), known as
    20010H0026B1905                  - 2 -

     1     the Public School Code of 1949.
     2     (b)  Prohibited membership.--The school employees categorized
     3  in subsection (a)(1) and (2) shall not have the right to elect
     4  membership in the system.
     5     (c)  Optional membership.--
     6         (1)  The school employees categorized in subsection
     7     (a)(3) and, if otherwise eligible, subsection (a)(4) shall
     8     have the right to elect membership in the system. Once such
     9     election is exercised, membership shall commence from the
    10     original date of eligibility and shall continue until the
    11     termination of such service.
    12         (2)  Notwithstanding anything to the contrary in Article
    13     XVII-A of the act of March 10, 1949 (P.L.30, No.14), known as
    14     the Public School Code of 1949, employees of a charter school
    15     shall only be eligible for membership in the system if the
    16     charter school in which they are employed affirmatively
    17     elects to have its employees to be eligible for membership in
    18     the system. Said election shall be in writing on a form
    19     prescribed by the board and filed with the system. Once such
    20     election is exercised, membership for eligible employees
    21     shall commence from the original date of their eligibility
    22     and shall continue until the termination of such service.
    23  § 8302.  Credited school service.
    24     (a)  Computation of credited service.--In computing credited
    25  school service of a member for the determination of benefits, a
    26  full-time salaried school employee shall receive one year of
    27  credit for each school year or the corresponding fraction
    28  thereof, in accordance with the proportion of the full school
    29  year for which both the required regular member and employer
    30  contributions have been made, or for which such contributions
    20010H0026B1905                  - 3 -

     1  otherwise required for such service were not made solely by
     2  reason of any provision of this part relating to the limitation
     3  under IRC § 401(a)(17). A per diem or hourly school employee
     4  shall receive one year of credited service for each
     5  nonoverlapping period of 12 consecutive months in which he is
     6  employed and for which both member and employer contributions
     7  are made, or would have been made but for such limitation under
     8  the IRC, for at least 180 full-day sessions or 1,100 hours of
     9  employment. If such member was employed and member or employer
    10  contributions were made for less than 180 full-day sessions or
    11  1,100 hours, he shall be credited with a fractional portion of a
    12  year determined by the ratio of the number of full-day sessions
    13  or hours of service actually rendered to 180 full-day sessions
    14  or 1,100 hours, as the case may be. A part-time salaried
    15  employee shall be credited with the fractional portion of the
    16  year which corresponds to the service actually rendered in
    17  relation to the service required as a comparable full-time
    18  salaried employee and for which both member and employer
    19  contributions were made. In no case shall a member receive more
    20  than one year of credited service for any 12 consecutive months
    21  or a member who has elected multiple service receive an
    22  aggregate in the two systems of more than one year of credited
    23  service for any 12 consecutive months.
    24     * * *
    25  § 8346.  Termination of annuities.
    26     (a)  General rule.--If an annuitant returns to school service
    27  or enters State service and elects multiple service membership,
    28  any annuity payable to him under this part shall cease and in
    29  the case of an annuity other than a disability annuity the
    30  present value of such annuity, adjusted for full coverage in the
    20010H0026B1905                  - 4 -

     1  case of a joint coverage member who makes the appropriate back
     2  contributions for full coverage, shall be frozen as of the date
     3  such annuity ceases. An annuitant who is credited with an
     4  additional 10% of membership service as provided in section
     5  8302(b.2) (relating to credited school service) and who returns
     6  to school service, except as provided in subsection (b), shall
     7  forfeit such credited service and shall have his frozen present
     8  value adjusted as if his 10% retirement incentive had not been
     9  applied to his account. In the event that the cost-of-living
    10  increase enacted December 18, 1979, occurred during the period
    11  of such State or school employment, the frozen present value
    12  shall be increased, on or after the member attains
    13  superannuation age, by the percent applicable had he not
    14  returned to service.
    15     (b)  Return to school service during emergency.--When, in the
    16  judgment of the employer, an emergency creates an increase in
    17  the work load such that there is serious impairment of service
    18  to the public or in the event of a shortage of appropriate
    19  subject certified teachers, an annuitant may be returned to
    20  school service for a period not to exceed [95] 120 full-day
    21  sessions in any school year without loss of his annuity. In
    22  computing the number of days an annuitant has returned to school
    23  service, any amount of time less than one-half of a day shall be
    24  counted as one-half of a day.
    25     (c)  Subsequent discontinuance of service.--Upon subsequent
    26  discontinuance of service, such member other than a former
    27  annuitant who had the effect of his frozen present value
    28  eliminated in accordance with subsection (d) or a former
    29  disability annuitant shall be entitled to an annuity which is
    30  actuarially equivalent to the sum of the present value as
    20010H0026B1905                  - 5 -

     1  determined under subsection (a) and the present value of a
     2  maximum single life annuity based on years of service credited
     3  subsequent to reentry in the system and his final average salary
     4  computed by reference to his compensation during his entire
     5  period of school and State service.
     6     (d)  Elimination of the effect of frozen present value.--
     7         (1)  An annuitant who returns to school service and earns
     8     three eligibility points by performing credited school
     9     service following the most recent period of receipt of an
    10     annuity under this part, or an annuitant who enters State
    11     service and:
    12             (i)  is a multiple service member; or
    13             (ii)  who elects multiple service membership, and
    14     earns three eligibility points by performing credited State
    15     service or credited school service following the most recent
    16     period of receipt of an annuity under this part, and who had
    17     the present value of his annuity frozen in accordance with
    18     subsection (a), shall qualify to have the effect of the
    19     frozen present value resulting from all previous periods of
    20     retirement eliminated, provided that all payments under
    21     Option 4 and annuity payments payable during previous periods
    22     of retirement plus interest as set forth in paragraph (3)
    23     shall be returned to the fund in the form of an actuarial
    24     adjustment to his subsequent benefits or in such form as the
    25     board may otherwise direct.
    26         (2)  Upon subsequent discontinuance of service and the
    27     filing of an application for an annuity, a former annuitant
    28     who qualifies to have the effect of a frozen present value
    29     eliminated under this subsection shall be entitled to receive
    30     the higher of either:
    20010H0026B1905                  - 6 -

     1             (i)  an annuity (prior to optional modification)
     2         calculated as if the freezing of the former annuitant's
     3         account pursuant to subsection (a) had not occurred,
     4         adjusted according to paragraph (3), provided that a
     5         former annuitant of the system or a former annuitant of
     6         the State Employees' Retirement System who retired under
     7         a provision of law granting additional service credit if
     8         termination of school or State service or retirement
     9         occurred during a specific period of time shall not be
    10         permitted to retain the additional service credit under
    11         the prior law when the annuity is computed for his most
    12         recent retirement; or
    13             (ii)  an annuity (prior to optional modification)
    14         calculated as if the former annuitant did not qualify to
    15         have the effect on the frozen present value eliminated,
    16     unless the former annuitant notifies the board in writing by
    17     the later of the date the application for annuity is filed or
    18     the effective date of retirement that the former annuitant
    19     wishes to receive the lower annuity.
    20         (3)  In addition to any other adjustment to the present
    21     value of the maximum single life annuity that a member may be
    22     entitled to receive that occurs as a result of any other
    23     provision of law, the present value of the maximum single
    24     life annuity shall be reduced by all amounts paid or payable
    25     to him during all previous periods of retirement plus
    26     interest on these amounts until the date of subsequent
    27     retirement. The interest for each year shall be calculated
    28     based upon the annual interest rate adopted for that school
    29     year by the board for the calculation of the normal
    30     contribution rate pursuant to section 8328(b) (relating to
    20010H0026B1905                  - 7 -

     1     actuarial cost method).
     2  § 8501.  Public School Employees' Retirement Board.
     3     (a)  Status and membership.--The board shall be an
     4  independent administrative board and shall consist of 15
     5  members: the Secretary of Education, ex officio; the State
     6  Treasurer, ex officio; two Senators; two members of the House of
     7  Representatives; the executive secretary of the Pennsylvania
     8  School Boards Association, ex officio; two to be appointed by
     9  the Governor, at least one of whom shall not be a school
    10  employee or an officer or employee of the State; three to be
    11  elected by the active professional members of the system from
    12  among their number; one to be elected by annuitants from among
    13  their number; one to be elected by the active nonprofessional
    14  members of the system from among their number; and one to be
    15  elected by members of Pennsylvania public school boards from
    16  among their number. The appointments made by the Governor shall
    17  be confirmed by the Senate and each election shall be conducted
    18  in a manner approved by the board. The terms of the appointed
    19  and nonlegislative elected members shall be three years. The
    20  members from the Senate shall be appointed by the President pro
    21  tempore of the Senate and shall consist of one member from the
    22  majority and one member from the minority. The members from the
    23  House of Representatives shall be appointed by the Speaker of
    24  the House of Representatives and shall consist of one member
    25  from the majority and one member from the minority. The
    26  legislative members shall serve on the board for the duration of
    27  [the terms for which they were elected] their legislative terms
    28  and shall continue to serve until 30 days after the convening of
    29  the next regular session of the General Assembly after the
    30  expiration of their respective legislative terms, or until a
    20010H0026B1905                  - 8 -

     1  successor is appointed for the new term, whichever occurs first.
     2  The chairman of the board shall be elected by the board members.
     3  Each ex officio member of the board and each legislative member
     4  of the board may appoint a duly authorized designee to act in
     5  his stead.
     6     (b)  [Appointment and terms of initial members.--For the
     7  purposes of securing an orderly transition and staggered terms,
     8  the elected members of the board serving on the effective date
     9  of this part shall serve until the expiration of their
    10  respective terms. The board member initially elected by members
    11  of Pennsylvania public school boards shall serve until January
    12  1, 1976. The board member initially elected by the active
    13  nonprofessional members of the system shall serve until January
    14  1, 1977. One of the initial board members appointed by the
    15  Governor after the effective date of this part shall serve until
    16  January 1, 1976 and the second appointed board member shall
    17  serve until January 1, 1977.] Vacancies.--A vacancy occurring
    18  during the term of any member shall be filled for the unexpired
    19  term by a successor appointed or elected as the case may be in
    20  the same manner as his predecessor.
    21     * * *
    22  § 8502.  Administrative duties of board.
    23     * * *
    24     (g)  Performance of employer duties.--In the event the
    25  employer fails to comply with the procedures as mandated in
    26  section 8506 (relating to duties of employers), the board shall
    27  perform such duties and bill the employer who shall pay for the
    28  cost of same. In the event the employer is delinquent in the
    29  payment of:
    30         (1)  the board's bill for the cost of the board to
    20010H0026B1905                  - 9 -

     1     perform the duties of the employer mandated in section 8506;
     2         (2)  the employer contributions required in accordance
     3     with section 8327 (relating to payments by employers)[,]; or
     4         (3)  the member contributions required in accordance with
     5     section 8506,
     6  then the board shall notify the Secretary of Education and the
     7  State Treasurer of such delinquency and certify the actual or
     8  estimated amount thereof. Within 30 days of the receipt of the
     9  board's delinquency notice, the Secretary of Education shall pay
    10  to the board the amount so certified that remains unpaid as of
    11  the date of secretary's payment. All such amounts paid by the
    12  Secretary of Education shall be credited by the board to the
    13  appropriate account in the fund. The Secretary of Education
    14  shall be entitled to exercise the remedy set forth in section
    15  8327(b) to recover any amounts paid to the board pursuant to
    16  this subsection. In the event the Secretary of Education
    17  exercises the remedy set forth in section 8327(b) to recover any
    18  amounts paid to the board, as a consequence of a delinquency
    19  caused by a charter school, and reduces the amount of funds paid
    20  to a chartering school district, as defined in Article XVII-A of
    21  the act of March 10, 1949 (P.L.30, No.14), known as the Public
    22  School Code of 1949, the chartering school district shall reduce
    23  the amount of funds paid to the charter school by any amount
    24  deducted by the Secretary of Education that would have otherwise
    25  been paid to the chartering school district.
    26     * * *
    27  § 8521.  Management of fund and accounts.
    28     * * *
    29     (h)  Venture capital[.--Venture capital investments shall be
    30  limited to not more than 2% of the book value of the total
    20010H0026B1905                 - 10 -

     1  assets of the fund as determined for financial statement
     2  purposes as of June 30 next preceding the date of investment. An
     3  investment shall be deemed a venture capital investment if it
     4  results in the acquisition of equity interests or a combination
     5  of debt and equity interests in a business which is expected to
     6  grow substantially in the future and in which the expected
     7  return on investment is to come predominantly from an increase
     8  in value of the equity interests and are not interests in or
     9  secured by real estate. A venture capital investment may be made
    10  only if, in the judgment of the board, the investment is
    11  reasonably likely to enhance the general welfare of this
    12  Commonwealth and its citizens and meets the standard of prudence
    13  set forth in subsection (a). In determining whether the
    14  investment meets the standard of prudence, the board may
    15  consider, together with the expected return on and the risk
    16  characteristics of the particular investment, the actual and
    17  expected future returns and the risk characteristics of the
    18  total venture capital investments held by the board at the time
    19  and the degree to which the proposed new investment would
    20  promote further diversification within the venture capital asset
    21  class.], private placement and alternative investments.--The
    22  board in its prudent discretion may make any venture capital
    23  investment, private placement investment or other alternative
    24  investment of any kind, structure or manner which meets the
    25  standard of prudence set forth in subsection (a).
    26     (i)  Vehicles for authorized investments.--The board in its
    27  prudent discretion may make any investments which meet the
    28  standard of prudence set forth in subsection (a) by [becoming a
    29  limited partner in partnerships that will hold such investments,
    30  or by acquiring shares or units of participation or otherwise
    20010H0026B1905                 - 11 -

     1  participating beneficially in bank collective trusts or in the
     2  separate accounts of any insurance company authorized to do
     3  business in this Commonwealth, or by acquiring stocks or shares
     4  or units of participation or otherwise participating
     5  beneficially in the fund of any corporation or trust organized
     6  or created and existing under the laws of the United States or
     7  of any state, district or territory thereof which fund is
     8  maintained for and consists of assets of employees' benefit
     9  trusts, including governmental plans as defined in IRC § 414(d)
    10  or which meet the requirements for qualification under IRC §
    11  401] acquiring any type of interest in a business organization
    12  existing under the laws of any jurisdiction, provided that, in
    13  any such case, the liability of the Public School Employees'
    14  Retirement Fund shall be limited to the amount of its
    15  investment.
    16     (j)  Legislative declaration concerning certain authorized
    17  investments.--The General Assembly finds and declares that
    18  authorized investments of the fund made by or on behalf of the
    19  board under this section whereby the board becomes a joint owner
    20  or stockholder in any company, corporation [or], association or
    21  other lawful business organization are outside the scope of the
    22  original intent of and therefor do not violate the prohibition
    23  set forth in section 8 of Article VIII of the Constitution of
    24  Pennsylvania.
    25     Section 2.  Sections 5901(a) and (b) and 5931(h), (i) and (j)
    26  of Title 71 are amended to read:
    27  § 5901.  The State Employees' Retirement Board.
    28     (a)  Status and membership.--The board shall be an
    29  independent administrative board and consist of 11 members: the
    30  State Treasurer, ex officio, two Senators [or former Senators],
    20010H0026B1905                 - 12 -

     1  two members [or former members] of the House of Representatives
     2  and six members appointed by the Governor, one of whom shall be
     3  an annuitant of the system, for terms of four years, subject to
     4  confirmation by the Senate. At least five board members shall be
     5  active members of the system, and at least two shall have ten or
     6  more years of credited State service. The chairman of the board
     7  shall be designated by the Governor from among the members of
     8  the board. Each member of the board who is a member of the
     9  General Assembly may appoint a duly authorized designee to act
    10  in his stead.
    11     (b)  Appointments and terms.--The two members elected by the
    12  board and serving on the effective date of this title shall
    13  continue to serve until the expiration of their respective
    14  terms. The members [or former members] of the Senate shall be
    15  appointed by the President pro tempore of the Senate and shall
    16  consist of a majority and a minority member [or former member].
    17  The members [or former members] of the House of Representatives
    18  shall be appointed by the Speaker of the House of
    19  Representatives and shall consist of a majority and a minority
    20  member [or former member]. The legislative members shall serve
    21  on the board for the duration of [the terms for which they were
    22  elected and former legislative members shall serve a term of two
    23  years.] their legislative terms and shall continue to serve
    24  until 30 days after the convening of the next regular session of
    25  the General Assembly after the expiration of their respective
    26  legislative terms, or until a successor is appointed for the new
    27  term, whichever occurs first. Of the remaining four appointees,
    28  one shall be appointed for an initial term of two years, one for
    29  an initial term of three years, and two for an initial term of
    30  four years. A vacancy occurring during the term of an appointed
    20010H0026B1905                 - 13 -

     1  member shall be filled for the unexpired term by the appointment
     2  and confirmation of a successor in the same manner as his
     3  predecessor.
     4     * * *
     5  § 5931.  Management of fund and accounts.
     6     * * *
     7     (h)  Venture capital[.--Venture capital investments shall be
     8  limited to not more than 2% of the book value of the total
     9  assets of the fund as determined for financial statement
    10  purposes as of December 31 next preceding the date of
    11  investment. An investment shall be deemed a venture capital
    12  investment if it results in the acquisition of equity interests
    13  or a combination of debt and equity interests in a business
    14  which is expected to grow substantially in the future and in
    15  which the expected return on investment is to come predominantly
    16  from an increase in value of the equity interests and are not
    17  interests in or secured by real estate. A venture capital
    18  investment may be made only if, in the judgment of the board,
    19  the investment is reasonably likely to enhance the general
    20  welfare of this Commonwealth and its citizens and meets the
    21  standard of prudence set forth in subsection (a). In determining
    22  whether the investment meets the standard of prudence, the board
    23  may consider, together with the expected return on and the risk
    24  characteristics of the particular investment, the actual and
    25  expected future returns and the risk characteristics of the
    26  total venture capital investments held by the board at the time
    27  and the degree to which the proposed new investment would
    28  promote further diversification within the venture capital asset
    29  class.], private placement and alternative investments.--The
    30  board in its prudent discretion may make any venture capital
    20010H0026B1905                 - 14 -

     1  investment, private placement investment or other alternative
     2  investment of any kind, structure or manner which meets the
     3  standard of prudence set forth in subsection (a).
     4     (i)  Vehicles for authorized investments.--The board in its
     5  prudent discretion may make any investments which meet the
     6  standard of prudence set forth in subsection (a) by [becoming a
     7  limited partner in partnerships that will hold such investments;
     8  or by acquiring shares or units of participation or otherwise
     9  participating beneficially in bank collective trusts or in the
    10  separate accounts of any insurance company authorized to do
    11  business in this Commonwealth; or by acquiring stocks or shares
    12  or units of participation or otherwise participating
    13  beneficially in the fund of any corporation or trust organized
    14  or created and existing under the laws of the United States or
    15  of any state, district or territory thereof, which fund is
    16  maintained for and consists of assets of employees' benefit
    17  trusts, including governmental plans as defined in IRC § 414(d)
    18  or which meet the requirements for qualification under IRC §
    19  401] acquiring any type of interest in a business organization
    20  existing under the laws of any jurisdiction, provided that, in
    21  any such case, the liability of the State Employees' Retirement
    22  Fund shall be limited to the amount of its investment.
    23     (j)  Legislative declaration concerning certain authorized
    24  investments.--The General Assembly finds and declares that
    25  authorized investments of the fund made by or on behalf of the
    26  board under this section whereby the board becomes a joint owner
    27  or stockholder in any company, corporation [or], association or
    28  other lawful business organization are outside the scope of the
    29  original intent of and therefore do not violate the prohibition
    30  set forth in section 8 of Article VIII of the Constitution of
    20010H0026B1905                 - 15 -

     1  Pennsylvania.
     2     Section 3.  Any and all investments of the Public School
     3  Employees' Retirement Board and of the State Employees'
     4  Retirement Board, respectively, which on the effective date of
     5  this section are owned or held through a vehicle as described in
     6  24 Pa.C.S. § 8521(i) or 71 Pa.C.S. § 5931(i), as applicable,
     7  shall be deemed to have been lawfully made through such vehicle
     8  at inception.
     9     Section 4.  All acts and parts of acts are repealed insofar
    10  as they are inconsistent with this act.
    11     Section 5.  This act shall take effect immediately.
    12     SECTION 1.  THE GENERAL ASSEMBLY FINDS AND DECLARES AS         <--
    13  FOLLOWS:
    14         (1)  THIS ACT CONTAINS BOTH BENEFIT AND ADMINISTRATIVE
    15     PENSION CHANGES. THE BENEFIT CHANGES INCLUDE AN ENHANCEMENT
    16     TO THE BASIC BENEFIT FORMULA, A REDUCTION IN THE VESTING
    17     REQUIREMENT, THE ADDITION OF A NEW CLASS OF BENEFITS FOR
    18     LEGISLATORS, AND A CHANGE TO THE CURRENT ARRANGEMENT BY WHICH
    19     MEMBERS CAN COMBINE SERVICE CREDIT WITH BOTH THE STATE
    20     EMPLOYEES' RETIREMENT SYSTEM AND THE PUBLIC SCHOOL EMPLOYEES'
    21     RETIREMENT SYSTEM.
    22         (2)  OVER THE PAST TWO DECADES, BOTH PENSION FUNDS HAVE
    23     EXPERIENCED INVESTMENT RETURNS WELL IN EXCESS OF
    24     EXPECTATIONS. AS A RESULT, STATE AND SCHOOL DISTRICT
    25     CONTRIBUTIONS HAVE DECREASED DRAMATICALLY TO LESS THAN 1% OF
    26     PAYROLL FOR NEXT YEAR. AT THE SAME TIME, EMPLOYEE
    27     CONTRIBUTIONS RANGE FROM 5% TO 6.25% OF PAYROLL. THE
    28     OUTSTANDING INVESTMENT PERFORMANCE HAS RESULTED IN THE
    29     PENSION FUNDS BEING OVER 123% FUNDED, COMPARED TO CURRENT
    30     NEEDS. THE 4% STATUTORY INTEREST RATE THE EMPLOYEES RECEIVE
    20010H0026B1905                 - 16 -

     1     ON THEIR PENSION ACCOUNTS HAS CONSISTENTLY BEEN ECLIPSED BY
     2     THE ACTUAL AVERAGE RETURNS OF THE FUNDS OVER THE LAST TWO
     3     DECADES, AND ALSO HAS BEEN LESS THAN AVAILABLE PRIVATE MARKET
     4     INTEREST RATES. THE FACT THAT EMPLOYEES HAVE BEEN AND ARE
     5     PROJECTED TO CONTINUE TO CONTRIBUTE AT A RATE THAT IS
     6     MATERIALLY GREATER THAN THE EMPLOYERS DUE TO THE MORE THAN
     7     100% FUNDED STATUS OF THE PLANS, RAISES THE ISSUE OF THE
     8     EXTENT TO WHICH EMPLOYEES SHOULD BE PROVIDED ADDITIONAL
     9     BENEFITS. THE INCREASE IN BENEFITS FOR STATE AND SCHOOL
    10     EMPLOYEES PROVIDED HEREIN WILL IN EFFECT ALLOW THEM FOR THE
    11     FIRST TIME TO SHARE IN THE OUTSTANDING INVESTMENT PERFORMANCE
    12     OF THE FUNDS. TO DATE, THAT EXPERIENCE HAS ONLY BENEFITED THE
    13     EMPLOYERS THROUGH REDUCED CONTRIBUTIONS TO THE FUNDS. EVEN
    14     WITH THE INCREASES IN BENEFITS PROVIDED HEREIN, BOTH PENSION
    15     FUNDS ARE PROJECTED TO MAINTAIN MINIMAL EMPLOYER CONTRIBUTION
    16     RATES, AND AT THE SAME TIME, MAINTAIN A FULLY FUNDED STATUS.
    17     FOR AT LEAST THE NEXT DECADE, MEMBERS ARE PROJECTED TO
    18     CONTINUE TO CONTRIBUTE AT A RATE SUBSTANTIALLY IN EXCESS OF
    19     THAT REQUIRED FROM THE EMPLOYERS.
    20         (3)  A MAJOR CHANGE IN THE MANNER IN WHICH BENEFITS ARE
    21     FUNDED IS WARRANTED. CURRENTLY, GAINS OR LOSSES RELATED TO
    22     THE FUNDING FOR BENEFITS ARE SPREAD OVER A 20-YEAR TIME
    23     FRAME. UNDER THIS PROPOSED CHANGE, THESE GAINS OR LOSSES WILL
    24     NOW BE SPREAD OVER A SHORTER TIME FRAME, THAT BEING TEN
    25     YEARS, INCREASING INTERGENERATIONAL EQUITY, BY REDUCING THE
    26     TIME ELAPSED BETWEEN THE SERVICE OF THE MEMBERS OF THE
    27     SYSTEMS AND THE RELATED FUNDING. A SIMILAR POLICY WAS ENACTED
    28     IN 1991, WHEN 30-YEAR FUNDING FOR THE TWO FUNDS WAS REDUCED
    29     TO 20-YEAR FUNDING.
    30         (4)  PARTICIPATION IN THE ENHANCED BENEFIT ACCRUAL RATE
    20010H0026B1905                 - 17 -

     1     SHOULD NOT BE MANDATORY FOR CURRENT MEMBERS. MEMBERS WHO
     2     ELECT TO PARTICIPATE SHOULD HAVE TO AGREE, AS PROVIDED
     3     HEREIN, TO INCREASE EMPLOYEE CONTRIBUTIONS AS CONSIDERATION
     4     FOR THEIR FUTURE RECEIPT OF ENHANCED BENEFITS AFTER THE
     5     TERMINATION OF SERVICE.
     6         (5)  THE APPROACH SET OUT HERETOFORE WAS CITED AS
     7     REASONABLE PUBLIC PENSION POLICY BY THE PUBLIC EMPLOYEE
     8     RETIREMENT COMMISSION IN A REPORT RELEASED ON MAY 7 OF THIS
     9     YEAR. AS THE COMMISSION FURTHER NOTED, CERTAIN PROVISIONS
    10     HEREIN WILL RESULT IN THE SYSTEMS BEING MORE CLOSELY ALIGNED
    11     WITH SIMILAR PLANS IN THE PRIVATE SECTOR AND FURTHER
    12     STRENGTHEN THE SYSTEMS' POSITIONS RELATIVE TO INTERNAL
    13     REVENUE CODE COMPLIANCE.
    14     SECTION 1.1.  THE DEFINITIONS OF "ACTIVE MEMBER," "BASIC
    15  CONTRIBUTION RATE," "CLASS OF SERVICE MULTIPLIER," "CREDITED
    16  SERVICE," "INACTIVE MEMBER," "SALARY DEDUCTIONS," "STANDARD
    17  SINGLE LIFE ANNUITY," "SUPERANNUATION OR NORMAL RETIREMENT AGE"
    18  AND "VESTEE" IN SECTION 8102 OF TITLE 24 OF THE PENNSYLVANIA
    19  CONSOLIDATED STATUTES ARE AMENDED TO READ:
    20  § 8102.  DEFINITIONS.
    21     THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS PART SHALL
    22  HAVE, UNLESS THE CONTEXT CLEARLY INDICATES OTHERWISE, THE
    23  MEANINGS GIVEN TO THEM IN THIS SECTION:
    24     * * *
    25     "ACTIVE MEMBER."  A SCHOOL EMPLOYEE FOR WHOM PICKUP
    26  CONTRIBUTIONS ARE BEING MADE TO THE FUND OR FOR WHOM SUCH
    27  CONTRIBUTIONS OTHERWISE REQUIRED FOR CURRENT SCHOOL SERVICE ARE
    28  NOT BEING MADE SOLELY BY REASON OF ANY PROVISION OF THIS PART
    29  RELATING TO THE [LIMITATION] LIMITATIONS UNDER SECTION
    30  401(A)(17) OR 415(B) OF THE INTERNAL REVENUE CODE OF 1986
    20010H0026B1905                 - 18 -

     1  (PUBLIC LAW 99-514, 26 U.S.C. § 401(A)(17) OR 415(B)).
     2     * * *
     3     "BASIC CONTRIBUTION RATE."  [THE] FOR CLASS T-A, T-B AND T-C
     4  SERVICE THE RATE OF 6 1/4%. FOR CLASS T-D SERVICE, THE RATE OF 7
     5  1/2%. FOR ALL ACTIVE MEMBERS ON THE EFFECTIVE DATE OF THIS
     6  PROVISION WHO ARE CURRENTLY PAYING 5 1/4% AND ELECT CLASS T-D
     7  SERVICE, THE RATE OF 6 1/2%.
     8     * * *
     9     "CLASS OF SERVICE MULTIPLIER."
    10                 CLASS OF SERVICE            MULTIPLIER
    11                       T-A                        .714
    12                       T-B                        .625
    13                       T-C                       1.000
    14                       T-D                       1.000
    15     * * *
    16     "CREDITED SERVICE."  SCHOOL OR CREDITABLE NONSCHOOL SERVICE
    17  FOR WHICH THE REQUIRED CONTRIBUTIONS HAVE BEEN MADE, OR FOR
    18  WHICH THE CONTRIBUTIONS OTHERWISE REQUIRED FOR SUCH SERVICE WERE
    19  NOT MADE SOLELY BY REASON OF ANY PROVISION OF THIS PART RELATING
    20  TO THE LIMITATIONS UNDER SECTION 401(A)(17) OR 415(B) OF THE
    21  INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. §
    22  401(A)(17) OR 415(B)), OR FOR WHICH SALARY DEDUCTIONS OR LUMP
    23  SUM PAYMENTS HAVE BEEN AGREED UPON IN WRITING.
    24     * * *
    25     "INACTIVE MEMBER."  A MEMBER FOR WHOM NO PICKUP CONTRIBUTIONS
    26  ARE BEING MADE, EXCEPT IN THE CASE OF AN ACTIVE MEMBER FOR WHOM
    27  SUCH CONTRIBUTIONS OTHERWISE REQUIRED FOR CURRENT SCHOOL SERVICE
    28  ARE NOT BEING MADE SOLELY BY REASON OF ANY PROVISION OF THIS
    29  PART RELATING TO THE [LIMITATION] LIMITATIONS UNDER SECTION
    30  401(A)(17) OR 415(B) OF THE INTERNAL REVENUE CODE OF 1986
    20010H0026B1905                 - 19 -

     1  (PUBLIC LAW 99-514, 26 U.S.C. § 401(A)(17) OR 415(B)), WHO HAS
     2  ACCUMULATED DEDUCTIONS STANDING TO HIS CREDIT IN THE FUND AND
     3  FOR WHOM CONTRIBUTIONS HAVE BEEN MADE WITHIN THE LAST TWO SCHOOL
     4  YEARS OR A MULTIPLE SERVICE MEMBER WHO IS ACTIVE IN THE STATE
     5  EMPLOYEES' RETIREMENT SYSTEM.
     6     * * *
     7     "SALARY DEDUCTIONS."  THE AMOUNTS CERTIFIED BY THE BOARD,
     8  DEDUCTED FROM THE COMPENSATION OF AN ACTIVE MEMBER OR THE STATE
     9  SERVICE COMPENSATION OF A MULTIPLE SERVICE MEMBER WHO IS AN
    10  ACTIVE MEMBER OF THE STATE EMPLOYEES' RETIREMENT SYSTEM AND PAID
    11  INTO THE FUND.
    12     * * *
    13     "STANDARD SINGLE LIFE ANNUITY."  [AN] FOR CLASS T-A, T-B AND
    14  T-C CREDITED SERVICE OF A MEMBER, AN ANNUITY EQUAL TO 2% OF THE
    15  FINAL AVERAGE SALARY, MULTIPLIED BY THE TOTAL NUMBER OF YEARS
    16  AND FRACTIONAL PART OF A YEAR OF CREDITED SERVICE OF A MEMBER.
    17  FOR CLASS T-D CREDITED SERVICE OF A MEMBER, AN ANNUITY EQUAL TO
    18  2.5% OF THE FINAL AVERAGE SALARY, MULTIPLIED BY THE TOTAL NUMBER
    19  OF YEARS AND FRACTIONAL PART OF A YEAR OF CREDITED SERVICE.
    20     * * *
    21     "SUPERANNUATION OR NORMAL RETIREMENT AGE."
    22             CLASS OF SERVICE            AGE
    23                 T-A             62 OR ANY AGE UPON ACCRUAL
    24                                    OF 35 ELIGIBILITY POINTS
    25                 T-B             62
    26                 T-C AND T-D     62 OR AGE 60 PROVIDED THE
    27                                    MEMBER HAS AT LEAST 30
    28                                    ELIGIBILITY POINTS OR
    29                                    ANY AGE UPON ACCRUAL OF
    30                                    35 ELIGIBILITY POINTS
    20010H0026B1905                 - 20 -

     1     * * *
     2     "VESTEE."  A MEMBER WITH [TEN] FIVE OR MORE ELIGIBILITY
     3  POINTS WHO HAS TERMINATED SCHOOL SERVICE, HAS LEFT HIS
     4  ACCUMULATED DEDUCTIONS IN THE FUND, AND IS DEFERRING FILING OF
     5  AN APPLICATION FOR RECEIPT OF AN ANNUITY.
     6     SECTION 1.2.  SECTIONS 8302(A), 8303(C), 8304(A) AND 8305 OF
     7  TITLE 24 ARE AMENDED TO READ:
     8  § 8302.  CREDITED SCHOOL SERVICE.
     9     (A)  COMPUTATION OF CREDITED SERVICE.--IN COMPUTING CREDITED
    10  SCHOOL SERVICE OF A MEMBER FOR THE DETERMINATION OF BENEFITS, A
    11  FULL-TIME SALARIED SCHOOL EMPLOYEE SHALL RECEIVE ONE YEAR OF
    12  CREDIT FOR EACH SCHOOL YEAR OR THE CORRESPONDING FRACTION
    13  THEREOF, IN ACCORDANCE WITH THE PROPORTION OF THE FULL SCHOOL
    14  YEAR FOR WHICH THE REQUIRED REGULAR MEMBER CONTRIBUTIONS HAVE
    15  BEEN MADE, OR FOR WHICH SUCH CONTRIBUTIONS OTHERWISE REQUIRED
    16  FOR SUCH SERVICE WERE NOT MADE SOLELY BY REASON OF ANY PROVISION
    17  OF THIS PART RELATING TO THE [LIMITATION] LIMITATIONS UNDER IRC
    18  § 401(A)(17) OR 415(B). A PER DIEM OR HOURLY SCHOOL EMPLOYEE
    19  SHALL RECEIVE ONE YEAR OF CREDITED SERVICE FOR EACH
    20  NONOVERLAPPING PERIOD OF 12 CONSECUTIVE MONTHS IN WHICH HE IS
    21  EMPLOYED AND FOR WHICH CONTRIBUTIONS ARE MADE, OR WOULD HAVE
    22  BEEN MADE BUT FOR SUCH [LIMITATION] LIMITATIONS UNDER THE IRC,
    23  FOR AT LEAST 180 FULL-DAY SESSIONS OR 1,100 HOURS OF EMPLOYMENT.
    24  IF SUCH MEMBER WAS EMPLOYED AND CONTRIBUTIONS WERE MADE FOR LESS
    25  THAN 180 FULL-DAY SESSIONS OR 1,100 HOURS, HE SHALL BE CREDITED
    26  WITH A FRACTIONAL PORTION OF A YEAR DETERMINED BY THE RATIO OF
    27  THE NUMBER OF FULL-DAY SESSIONS OR HOURS OF SERVICE ACTUALLY
    28  RENDERED TO 180 FULL-DAY SESSIONS OR 1,100 HOURS, AS THE CASE
    29  MAY BE. A PART-TIME SALARIED EMPLOYEE SHALL BE CREDITED WITH THE
    30  FRACTIONAL PORTION OF THE YEAR WHICH CORRESPONDS TO THE SERVICE
    20010H0026B1905                 - 21 -

     1  ACTUALLY RENDERED IN RELATION TO THE SERVICE REQUIRED AS A
     2  COMPARABLE FULL-TIME SALARIED EMPLOYEE. IN NO CASE SHALL A
     3  MEMBER RECEIVE MORE THAN ONE YEAR OF CREDITED SERVICE FOR ANY 12
     4  CONSECUTIVE MONTHS OR A MEMBER WHO HAS ELECTED MULTIPLE SERVICE
     5  RECEIVE AN AGGREGATE IN THE TWO SYSTEMS OF MORE THAN ONE YEAR OF
     6  CREDITED SERVICE FOR ANY 12 CONSECUTIVE MONTHS.
     7     * * *
     8  § 8303.  ELIGIBILITY POINTS FOR RETENTION AND REINSTATEMENT OF
     9             SERVICE CREDITS.
    10     * * *
    11     (C)  PURCHASE OF PREVIOUS CREDITABLE SERVICE.--EVERY ACTIVE
    12  MEMBER OF THE SYSTEM OR A MULTIPLE SERVICE MEMBER WHO IS AN
    13  ACTIVE MEMBER OF THE STATE EMPLOYEES' RETIREMENT SYSTEM ON OR
    14  AFTER THE EFFECTIVE DATE OF THIS PART MAY PURCHASE CREDIT AND
    15  RECEIVE ELIGIBILITY POINTS:
    16         (1)  AS A MEMBER OF CLASS T-C FOR PREVIOUS SCHOOL SERVICE
    17     OR CREDITABLE NONSCHOOL SERVICE; OR
    18         (2)  AS A MEMBER OF CLASS T-D FOR PREVIOUS SCHOOL
    19     SERVICE, PROVIDED THE MEMBER ELECTS TO BECOME A CLASS T-D
    20     MEMBER PURSUANT TO SECTION 8305.1 (RELATING TO ELECTION TO
    21     BECOME A CLASS T-D MEMBER);
    22  UPON WRITTEN AGREEMENT BY THE MEMBER AND THE BOARD AS TO THE
    23  MANNER OF PAYMENT OF THE AMOUNT DUE FOR CREDIT FOR SUCH SERVICE;
    24  EXCEPT, THAT ANY PURCHASE FOR REINSTATEMENT OF SERVICE CREDIT
    25  SHALL BE FOR ALL SERVICE PREVIOUSLY CREDITED.
    26  § 8304.  CREDITABLE NONSCHOOL SERVICE.
    27     (A)  ELIGIBILITY.--AN ACTIVE MEMBER OR A MULTIPLE SERVICE
    28  MEMBER WHO IS AN ACTIVE MEMBER OF THE STATE EMPLOYEES'
    29  RETIREMENT SYSTEM SHALL BE ELIGIBLE TO RECEIVE CLASS T-C SERVICE
    30  CREDIT FOR CREDITABLE NONSCHOOL SERVICE AND CLASS T-D SERVICE
    20010H0026B1905                 - 22 -

     1  FOR INTERVENING MILITARY SERVICE, PROVIDED THE MEMBER ELECTS TO
     2  BECOME A CLASS T-D MEMBER PURSUANT TO SECTION 8305.1 (RELATING
     3  TO ELECTION TO BECOME A CLASS T-D MEMBER), AS SET FORTH IN
     4  SUBSECTION (B) PROVIDED THAT HE IS NOT ENTITLED TO RECEIVE,
     5  ELIGIBLE TO RECEIVE NOW OR IN THE FUTURE, OR IS RECEIVING
     6  RETIREMENT BENEFITS FOR SUCH SERVICE UNDER A RETIREMENT SYSTEM
     7  ADMINISTERED AND WHOLLY OR PARTIALLY PAID FOR BY ANY OTHER
     8  GOVERNMENTAL AGENCY OR BY ANY PRIVATE EMPLOYER, OR A RETIREMENT
     9  PROGRAM APPROVED BY THE EMPLOYER IN ACCORDANCE WITH SECTION
    10  8301(A)(1) (RELATING TO MANDATORY AND OPTIONAL MEMBERSHIP), AND
    11  FURTHER PROVIDED THAT SUCH SERVICE IS CERTIFIED BY THE PREVIOUS
    12  EMPLOYER AND THE MANNER OF PAYMENT OF THE AMOUNT DUE IS AGREED
    13  UPON BY THE MEMBER, THE EMPLOYER, AND THE BOARD.
    14     * * *
    15  § 8305.  CLASSES OF SERVICE.
    16     (A)  CLASS T-C MEMBERSHIP.--A SCHOOL EMPLOYEE WHO IS A MEMBER
    17  OF CLASS T-C ON THE EFFECTIVE DATE OF THIS PART OR WHO BECOMES A
    18  MEMBER OF THE SYSTEM SUBSEQUENT TO THE EFFECTIVE DATE OF THIS
    19  PART SHALL BE CLASSIFIED AS A CLASS T-C MEMBER, PROVIDED THE
    20  SCHOOL EMPLOYEE DOES NOT BECOME A MEMBER OF CLASS T-D PURSUANT
    21  TO SUBSECTION (C).
    22     (B)  OTHER CLASS MEMBERSHIP.--A SCHOOL EMPLOYEE WHO IS A
    23  MEMBER OF A CLASS OF SERVICE OTHER THAN CLASS T-C ON THE
    24  EFFECTIVE DATE OF THIS PART MAY ELECT TO BECOME A MEMBER OF
    25  CLASS T-C OR CLASS T-D OR MAY RETAIN HIS MEMBERSHIP IN SUCH
    26  OTHER CLASS UNTIL THE SERVICE IS DISCONTINUED OR HE ELECTS TO
    27  BECOME A FULL COVERAGE MEMBER OR ELECTS TO PURCHASE CREDIT FOR
    28  PREVIOUS SCHOOL OR CREDITABLE NONSCHOOL SERVICE. ANY SERVICE
    29  THEREAFTER SHALL BE CREDITED AS CLASS T-C OR T-D SERVICE, AS
    30  APPLICABLE.
    20010H0026B1905                 - 23 -

     1     (C)  CLASS T-D MEMBERSHIP.--
     2         (1)  A PERSON WHO BECOMES A SCHOOL EMPLOYEE AND AN ACTIVE
     3     MEMBER, OR A PERSON WHO BECOMES A MULTIPLE SERVICE MEMBER WHO
     4     IS A STATE EMPLOYEE AND A MEMBER OF THE STATE EMPLOYEES'
     5     RETIREMENT SYSTEM, ON OR AFTER THE EFFECTIVE DATE OF THIS
     6     SUBSECTION SHALL BE CLASSIFIED AS A CLASS T-D MEMBER UPON
     7     PAYMENT OF REGULAR MEMBER CONTRIBUTIONS. ANY PRIOR SCHOOL
     8     SERVICE CREDITED AS CLASS T-C SERVICE SHALL BE CREDITED AS
     9     CLASS T-D SERVICE, SUBJECT TO THE LIMITATIONS CONTAINED IN
    10     PARAGRAPH (4).
    11         (2)  A SCHOOL EMPLOYEE WHO, ON THE DAY BEFORE AND ON THE
    12     EFFECTIVE DATE OF THIS SUBSECTION, IS EITHER AN ACTIVE MEMBER
    13     OR AN INACTIVE MEMBER SHALL BE CLASSIFIED AS A CLASS T-D
    14     MEMBER AND RECEIVE CREDIT FOR CLASS T-D SERVICE PERFORMED ON
    15     OR AFTER THE EFFECTIVE DATE OF THIS SUBSECTION UPON PAYMENT
    16     OF REGULAR MEMBER CONTRIBUTIONS, PROVIDED THE SCHOOL EMPLOYEE
    17     ELECTS TO BECOME A CLASS T-D MEMBER PURSUANT TO SECTION
    18     8305.1 (RELATING TO ELECTION TO BECOME A CLASS T-D MEMBER). A
    19     SCHOOL EMPLOYEE WHO BECOMES A CLASS T-D MEMBER SHALL ALSO
    20     RECEIVE CLASS T-D SERVICE CREDIT FOR ALL CLASS T-C SCHOOL
    21     SERVICE PERFORMED BEFORE THE EFFECTIVE DATE OF THIS
    22     SUBSECTION, SUBJECT TO THE LIMITATIONS CONTAINED IN PARAGRAPH
    23     (4).
    24         (3)  A FORMER SCHOOL EMPLOYEE WHO, ON THE EFFECTIVE DATE
    25     OF THIS SUBSECTION, IS A MULTIPLE SERVICE MEMBER WHO IS A
    26     STATE EMPLOYEE AND A MEMBER OF THE STATE EMPLOYEES'
    27     RETIREMENT SYSTEM SHALL RECEIVE CLASS T-D SERVICE CREDIT FOR
    28     ALL CLASS T-C SCHOOL SERVICE PERFORMED BEFORE THE EFFECTIVE
    29     DATE OF THIS SUBSECTION, SUBJECT TO THE LIMITATIONS CONTAINED
    30     IN PARAGRAPH (4), PROVIDED THE FORMER SCHOOL EMPLOYEE ELECTS
    20010H0026B1905                 - 24 -

     1     TO BECOME A CLASS T-D MEMBER PURSUANT TO SECTION 8305.1.
     2         (4)  (I)  SCHOOL SERVICE PERFORMED AS CLASS T-C SERVICE
     3         BEFORE THE EFFECTIVE DATE OF THIS SUBSECTION SHALL BE
     4         CREDITED AS CLASS T-D SERVICE ONLY UPON COMPLETION OF ALL
     5         ACTS NECESSARY FOR THE SCHOOL SERVICE TO BE CREDITED AS
     6         CLASS T-C SERVICE HAD THIS SUBSECTION NOT BEEN ENACTED.
     7             (II)  A PERSON WHO IS NOT A SCHOOL EMPLOYEE OR A
     8         STATE EMPLOYEE ON JUNE 30, 2001, AND JULY 1, 2001, AND
     9         WHO HAS PREVIOUS SCHOOL SERVICE SHALL NOT RECEIVE CLASS
    10         T-D SERVICE CREDIT FOR SCHOOL SERVICE PERFORMED BEFORE
    11         JULY 1, 2001, UNTIL THE PERSON BECOMES AN ACTIVE MEMBER
    12         OR AN ACTIVE MEMBER OF THE STATE EMPLOYEES' RETIREMENT
    13         SYSTEM AND A MULTIPLE SERVICE MEMBER AND EARNS THREE
    14         ELIGIBILITY POINTS BY PERFORMING CREDITED SCHOOL SERVICE
    15         OR STATE SERVICE AFTER JUNE 30, 2001. THIS SUBPARAGRAPH
    16         DOES NOT APPLY TO A DISABILITY ANNUITANT WHO RETURNS TO
    17         SCHOOL SERVICE AFTER JUNE 30, 2001, UPON TERMINATION OF
    18         THE DISABILITY ANNUITY.
    19     SECTION 1.3.  TITLE 24 IS AMENDED BY ADDING A SECTION TO
    20  READ:
    21  § 8305.1.  ELECTION TO BECOME A CLASS T-D MEMBER.
    22     (A)  GENERAL RULE.--A PERSON WHO IS:
    23         (1)  A MEMBER OF THE SYSTEM; OR
    24         (2)  A MULTIPLE SERVICE MEMBER WHO IS A STATE EMPLOYEE
    25     AND A MEMBER OF THE STATE EMPLOYEES' RETIREMENT SYSTEM;
    26  AND WHO, ON THE EFFECTIVE DATE OF THIS SUBSECTION, IS ELIGIBLE
    27  FOR CLASS T-D MEMBERSHIP MAY ELECT TO BECOME A MEMBER OF CLASS
    28  T-D.
    29     (B)  TIME FOR MAKING ELECTION.--THE MEMBER MUST ELECT TO
    30  BECOME A CLASS T-D MEMBER BY FILING A WRITTEN NOTICE WITH THE
    20010H0026B1905                 - 25 -

     1  BOARD ON OR BEFORE DECEMBER 31, 2001, OR BEFORE THE TERMINATION
     2  OF SCHOOL SERVICE OR STATE SERVICE AS APPLICABLE, WHICHEVER
     3  FIRST OCCURS.
     4     (C)  EFFECT OF ELECTION.--AN ELECTION TO BECOME A CLASS T-D
     5  MEMBER SHALL REMAIN IN EFFECT UNTIL THE TERMINATION OF
     6  EMPLOYMENT AND SHALL RESULT IN ALL SERVICE WHICH COULD HAVE BEEN
     7  CREDITED AS CLASS T-C SERVICE BEING CREDITED AS CLASS T-D
     8  SERVICE. THOSE MEMBERS WHO, ON THE EFFECTIVE DATE OF THIS
     9  SECTION, CONTRIBUTE AT THE RATE OF 5 1/4% SHALL BE DEEMED TO
    10  HAVE ACCEPTED THE BASIC CONTRIBUTION RATE OF 6 1/2% FOR ALL
    11  CLASS T-D SERVICE PERFORMED ON OR AFTER JANUARY 1, 2002. THOSE
    12  MEMBERS WHO, ON THE EFFECTIVE DATE OF THIS SECTION, CONTRIBUTE
    13  AT THE RATE OF 6 1/4% SHALL BE DEEMED TO HAVE ACCEPTED THE BASIC
    14  CONTRIBUTION RATE OF 7 1/2% FOR ALL CLASS T-D SERVICE PERFORMED
    15  ON OR AFTER JANUARY 1, 2002.
    16     (D)  EFFECT OF FAILURE TO MAKE ELECTION.--IF THE MEMBER FAILS
    17  TO TIMELY FILE AN ELECTION TO BECOME A CLASS T-D MEMBER, THEN
    18  ALL OF THE MEMBER'S CLASS T-C SCHOOL SERVICE SHALL BE CREDITED
    19  AS CLASS T-C SERVICE, AND SAID SERVICE SHALL NOT BE ELIGIBLE FOR
    20  CLASS T-D SERVICE CREDIT UPON TERMINATION OF SERVICE AND
    21  SUBSEQUENT EMPLOYMENT AS AN ACTIVE MEMBER.
    22     SECTION 2.  SECTIONS 8306, 8307(B), 8308, 8321, 8323(A), (C),
    23  (C.1) AND (D), 8324(B), (C) AND (D), 8325, 8327(B) AND 8328(B),
    24  (C), (D) AND (E) OF TITLE 24 ARE AMENDED TO READ:
    25  § 8306.  ELIGIBILITY POINTS.
    26     (A)  GENERAL RULE.--AN ACTIVE MEMBER OF THE SYSTEM SHALL
    27  ACCRUE ONE ELIGIBILITY POINT FOR EACH YEAR OF CREDITED SERVICE
    28  AS A MEMBER OF THE SCHOOL OR STATE RETIREMENT SYSTEM. A MEMBER
    29  SHALL ACCRUE AN ADDITIONAL TWO-THIRDS OF AN ELIGIBILITY POINT
    30  FOR EACH YEAR OF CLASS D-3 CREDITED SERVICE UNDER THE STATE
    20010H0026B1905                 - 26 -

     1  EMPLOYEES' RETIREMENT SYSTEM. IN THE CASE OF A FRACTIONAL PART
     2  OF A YEAR OF CREDITED SERVICE, A MEMBER SHALL ACCRUE THE
     3  CORRESPONDING FRACTIONAL PORTION OF AN ELIGIBILITY POINT.
     4     (B)  TRANSITIONAL RULE.--FOR THE PURPOSES OF THE TRANSITION:
     5         (1)  IN DETERMINING WHETHER A MEMBER, OTHER THAN A
     6     DISABILITY ANNUITANT WHO RETURNS TO SCHOOL SERVICE AFTER JUNE
     7     30, 2001, UPON TERMINATION OF THE DISABILITY ANNUITY, WHO IS
     8     NOT A SCHOOL EMPLOYEE OR A STATE EMPLOYEE ON JUNE 30, 2001,
     9     AND JULY 1, 2001, AND WHO HAS PREVIOUS SCHOOL SERVICE, HAS
    10     THE FIVE ELIGIBILITY POINTS REQUIRED BY THE DEFINITION OF
    11     "VESTEE" IN SECTIONS 8102 (RELATING TO DEFINITIONS), 8307
    12     (RELATING TO ELIGIBILITY FOR ANNUITIES), 8308 (RELATING TO
    13     ELIGIBILITY FOR VESTING) AND 8345 (RELATING TO MEMBER'S
    14     OPTIONS), ONLY ELIGIBILITY POINTS EARNED BY PERFORMING
    15     CREDITED SCHOOL SERVICE OR CREDITED STATE SERVICE AFTER JUNE
    16     30, 2001, SHALL BE COUNTED UNTIL SUCH MEMBER EARNS ONE
    17     ELIGIBILITY POINT BY PERFORMING CREDITED SCHOOL SERVICE OR
    18     CREDITED STATE SERVICE AFTER JUNE 30, 2001, AT WHICH TIME ALL
    19     ELIGIBILITY POINTS AS DETERMINED UNDER SUBSECTION (A) SHALL
    20     BE COUNTED.
    21         (2)  A MEMBER SUBJECT TO PARAGRAPH (1) SHALL BE
    22     CONSIDERED TO HAVE SATISFIED ANY REQUIREMENT FOR FIVE
    23     ELIGIBILITY POINTS CONTAINED IN THIS PART IF THE MEMBER HAS
    24     AT LEAST TEN ELIGIBILITY POINTS DETERMINED UNDER SUBSECTION
    25     (A).
    26  § 8307.  ELIGIBILITY FOR ANNUITIES.
    27     * * *
    28     (B)  WITHDRAWAL ANNUITY.--A VESTEE WITH [TEN] FIVE OR MORE
    29  ELIGIBILITY POINTS OR AN ACTIVE OR INACTIVE MEMBER WHO
    30  TERMINATES SCHOOL SERVICE HAVING [TEN] FIVE OR MORE ELIGIBILITY
    20010H0026B1905                 - 27 -

     1  POINTS SHALL, UPON FILING A PROPER APPLICATION, BE ENTITLED TO
     2  RECEIVE AN EARLY ANNUITY.
     3     * * *
     4  § 8308.  ELIGIBILITY FOR VESTING.
     5     ANY MEMBER WHO TERMINATES SCHOOL SERVICE WITH [TEN] FIVE OR
     6  MORE ELIGIBILITY POINTS SHALL BE ENTITLED TO VEST HIS RETIREMENT
     7  BENEFITS UNTIL ATTAINMENT OF SUPERANNUATION AGE.
     8  § 8321.  REGULAR MEMBER CONTRIBUTIONS FOR CURRENT SERVICE.
     9     REGULAR MEMBER CONTRIBUTIONS SHALL BE MADE TO THE FUND ON
    10  BEHALF OF EACH ACTIVE MEMBER FOR CURRENT SERVICE EXCEPT FOR ANY
    11  PERIOD OF CURRENT SERVICE IN WHICH THE MAKING OF SUCH
    12  CONTRIBUTIONS HAS CEASED SOLELY BY REASON OF ANY PROVISION OF
    13  THIS PART RELATING TO THE [LIMITATION] LIMITATIONS UNDER IRC §
    14  401(A)(17) OR 415(B).
    15  § 8323.  MEMBER CONTRIBUTIONS FOR CREDITABLE SCHOOL SERVICE.
    16     (A)  PREVIOUS SCHOOL SERVICE, SABBATICAL LEAVE AND FULL
    17  COVERAGE.--THE CONTRIBUTIONS TO BE PAID BY AN ACTIVE MEMBER OR
    18  AN ELIGIBLE STATE EMPLOYEE FOR CREDIT FOR REINSTATEMENT OF ALL
    19  PREVIOUSLY CREDITED SCHOOL SERVICE, SCHOOL SERVICE NOT
    20  PREVIOUSLY CREDITED, SABBATICAL LEAVE AS IF HE HAD BEEN IN FULL-
    21  TIME DAILY ATTENDANCE, OR FULL-COVERAGE MEMBERSHIP SHALL BE
    22  SUFFICIENT TO PROVIDE AN AMOUNT EQUAL TO THE ACCUMULATED
    23  DEDUCTIONS WHICH WOULD HAVE BEEN STANDING TO THE CREDIT OF THE
    24  MEMBER FOR SUCH SERVICE HAD REGULAR MEMBER CONTRIBUTIONS BEEN
    25  MADE WITH FULL COVERAGE AT THE RATE OF CONTRIBUTION NECESSARY TO
    26  BE CREDITED AS CLASS T-C SERVICE OR CLASS T-D SERVICE IF THE
    27  MEMBER IS A CLASS T-D MEMBER AND HAD SUCH CONTRIBUTIONS BEEN
    28  CREDITED WITH STATUTORY INTEREST DURING THE PERIOD THE
    29  CONTRIBUTIONS WOULD HAVE BEEN MADE AND DURING ALL PERIODS OF
    30  SUBSEQUENT SCHOOL AND STATE SERVICE UP TO THE DATE OF PURCHASE.
    20010H0026B1905                 - 28 -

     1     * * *
     2     (C)  APPROVED LEAVE OF ABSENCE OTHER THAN SABBATICAL LEAVE
     3  AND ACTIVATED MILITARY SERVICE LEAVE.--THE CONTRIBUTIONS TO BE
     4  PAID BY AN ACTIVE MEMBER FOR CREDIT FOR AN APPROVED LEAVE OF
     5  ABSENCE, OTHER THAN SABBATICAL LEAVE AND ACTIVATED MILITARY
     6  SERVICE LEAVE, SHALL BE SUFFICIENT TO TRANSFER HIS MEMBERSHIP TO
     7  CLASS T-C OR TO CLASS T-D IF THE MEMBER IS A CLASS T-D MEMBER
     8  AND FURTHER TO PROVIDE AN ANNUITY AS A CLASS T-C MEMBER OR CLASS
     9  T-D MEMBER IF THE MEMBER IS A CLASS T-D MEMBER FOR SUCH
    10  ADDITIONAL CREDITED SERVICE. SUCH AMOUNT SHALL BE THE SUM OF THE
    11  AMOUNT REQUIRED IN ACCORDANCE WITH THE PROVISIONS OF SUBSECTION
    12  (B) AND AN AMOUNT DETERMINED AS THE SUM OF THE MEMBER'S BASIC
    13  CONTRIBUTION RATE AND THE NORMAL CONTRIBUTION RATE AS PROVIDED
    14  IN SECTION 8328 (RELATING TO ACTUARIAL COST METHOD) DURING SUCH
    15  PERIOD MULTIPLIED BY THE COMPENSATION WHICH WAS RECEIVED OR
    16  WHICH WOULD HAVE BEEN RECEIVED DURING SUCH PERIOD AND WITH
    17  STATUTORY INTEREST DURING ALL PERIODS OF SUBSEQUENT SCHOOL AND
    18  STATE SERVICE UP TO THE DATE OF PURCHASE.
    19     (C.1)  ACTIVATED MILITARY SERVICE LEAVE.--THE CONTRIBUTIONS
    20  TO BE PAID BY AN ACTIVE MEMBER FOR CREDIT FOR ALL ACTIVATED
    21  MILITARY SERVICE LEAVE AS IF HE HAD BEEN IN REGULAR ATTENDANCE
    22  IN THE DUTIES FOR WHICH HE IS EMPLOYED SHALL BE SUFFICIENT TO
    23  PROVIDE AN AMOUNT EQUAL TO THE ACCUMULATED DEDUCTIONS WHICH
    24  WOULD HAVE BEEN STANDING TO THE CREDIT OF THE MEMBER FOR SUCH
    25  SERVICE HAD REGULAR MEMBER CONTRIBUTIONS BEEN MADE WITH FULL
    26  COVERAGE AT THE RATE OF CONTRIBUTION NECESSARY TO BE CREDITED AS
    27  CLASS T-C SERVICE OR CLASS T-D SERVICE IF THE MEMBER IS A CLASS
    28  T-D MEMBER AND HAD SUCH CONTRIBUTIONS BEEN CREDITED WITH
    29  STATUTORY INTEREST DURING THE PERIOD THE CONTRIBUTIONS WOULD
    30  HAVE BEEN MADE AND DURING ALL PERIODS OF SUBSEQUENT STATE AND
    20010H0026B1905                 - 29 -

     1  SCHOOL SERVICE UP TO THE DATE OF PURCHASE. IN THE CASE OF
     2  ACTIVATED MILITARY SERVICE LEAVE BEGINNING AFTER THE DATE OF
     3  ENACTMENT OF THIS SUBSECTION, CONTRIBUTIONS DUE FROM THE MEMBER
     4  SHALL BE MADE AS IF HE IS IN REGULAR ATTENDANCE IN THE DUTIES
     5  FOR WHICH HE IS EMPLOYED.
     6     (D)  CERTIFICATION AND PAYMENT OF CONTRIBUTIONS.--
     7         (1)  IN ALL CASES OTHER THAN FOR THE PURCHASE OF CREDIT
     8     FOR SABBATICAL LEAVE AND ACTIVATED MILITARY SERVICE LEAVE
     9     BEGINNING BEFORE THE EFFECTIVE DATE OF PARAGRAPH (2), THE
    10     AMOUNT PAYABLE SHALL BE CERTIFIED BY THE BOARD IN ACCORDANCE
    11     WITH METHODS APPROVED BY THE ACTUARY AND MAY BE PAID IN A
    12     LUMP SUM WITHIN 90 DAYS OR[,] IN THE CASE OF AN ACTIVE
    13     MEMBER[,] OR AN ELIGIBLE STATE EMPLOYEE WHO IS AN ACTIVE
    14     MEMBER OF THE STATE EMPLOYEES' RETIREMENT SYSTEM, IT MAY BE
    15     AMORTIZED WITH STATUTORY INTEREST THROUGH SALARY DEDUCTIONS
    16     [OR BY PERSONAL CHECKS] IN AMOUNTS AGREED UPON BY THE MEMBER
    17     AND THE BOARD. THE SALARY DEDUCTION AMORTIZATION PLANS AGREED
    18     TO BY MEMBERS AND THE BOARD MAY INCLUDE A DEFERRAL OF PAYMENT
    19     AMOUNTS AND STATUTORY INTEREST UNTIL THE TERMINATION OF
    20     SCHOOL SERVICE OR STATE SERVICE, AS THE BOARD, IN ITS SOLE
    21     DISCRETION, DECIDES TO ALLOW. THE BOARD MAY LIMIT SALARY
    22     DEDUCTION AMORTIZATION PLANS TO SUCH TERMS AS THE BOARD, IN
    23     ITS SOLE DISCRETION, DETERMINES. IN THE CASE OF AN ELIGIBLE
    24     STATE EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE STATE
    25     EMPLOYEES' RETIREMENT SYSTEM, THE AGREED UPON SALARY
    26     DEDUCTIONS SHALL BE REMITTED TO THE STATE EMPLOYEES'
    27     RETIREMENT BOARD, WHICH SHALL CERTIFY AND TRANSFER TO THE
    28     BOARD THE AMOUNTS PAID.
    29         (2)  IN THE CASE OF ACTIVATED MILITARY SERVICE LEAVE
    30     BEGINNING BEFORE THE EFFECTIVE DATE OF THIS PARAGRAPH, THE
    20010H0026B1905                 - 30 -

     1     AMOUNT PAYABLE MAY BE PAID ACCORDING TO THIS SUBSECTION OR
     2     SUBSECTION (C.1), BUT ALL LUMP SUM PAYMENTS MUST BE MADE [AND
     3     ALL AMORTIZATION PAYMENTS COMMENCED] WITHIN ONE YEAR OF THE
     4     TERMINATION OF ACTIVATED MILITARY SERVICE LEAVE.
     5  § 8324.  CONTRIBUTIONS FOR PURCHASE OF CREDIT FOR CREDITABLE
     6             NONSCHOOL SERVICE.
     7     * * *
     8     (B)  NONINTERVENING MILITARY SERVICE.--THE AMOUNT DUE FOR THE
     9  PURCHASE OF CREDIT FOR MILITARY SERVICE OTHER THAN INTERVENING
    10  MILITARY SERVICE SHALL BE DETERMINED BY APPLYING THE MEMBER'S
    11  BASIC CONTRIBUTION RATE PLUS THE NORMAL CONTRIBUTION RATE AS
    12  PROVIDED IN SECTION 8328 (RELATING TO ACTUARIAL COST METHOD) AT
    13  THE TIME OF ENTRY OF THE MEMBER INTO SCHOOL SERVICE SUBSEQUENT
    14  TO SUCH MILITARY SERVICE TO ONE-THIRD OF HIS TOTAL COMPENSATION
    15  RECEIVED DURING THE FIRST THREE YEARS OF SUCH SUBSEQUENT
    16  CREDITED SCHOOL SERVICE AND MULTIPLYING THE PRODUCT BY THE
    17  NUMBER OF YEARS AND FRACTIONAL PART OF A YEAR OF CREDITABLE
    18  NONINTERVENING MILITARY SERVICE BEING PURCHASED TOGETHER WITH
    19  STATUTORY INTEREST DURING ALL PERIODS OF SUBSEQUENT SCHOOL AND
    20  STATE SERVICE TO DATE OF PURCHASE. UPON CERTIFICATION OF THE
    21  AMOUNT DUE, PAYMENT MAY BE MADE IN A LUMP SUM WITHIN 90 DAYS OR
    22  IN THE CASE OF AN ACTIVE MEMBER OR AN ELIGIBLE STATE EMPLOYEE
    23  WHO IS AN ACTIVE MEMBER OF THE STATE EMPLOYEES' RETIREMENT
    24  SYSTEM IT MAY BE AMORTIZED WITH STATUTORY INTEREST THROUGH
    25  SALARY DEDUCTIONS [OR BY PERSONAL CHECKS] IN AMOUNTS AGREED UPON
    26  BY THE MEMBER AND THE BOARD. THE SALARY DEDUCTION AMORTIZATION
    27  PLANS AGREED TO BY MEMBERS AND THE BOARD MAY INCLUDE A DEFERRAL
    28  OF PAYMENT AMOUNTS AND STATUTORY INTEREST UNTIL THE TERMINATION
    29  OF SCHOOL SERVICE OR STATE SERVICE, AS THE BOARD, IN ITS SOLE
    30  DISCRETION, DECIDES TO ALLOW. THE BOARD MAY LIMIT SALARY
    20010H0026B1905                 - 31 -

     1  DEDUCTION AMORTIZATION PLANS TO SUCH TERMS AS THE BOARD, IN ITS
     2  SOLE DISCRETION, DETERMINES. IN THE CASE OF AN ELIGIBLE STATE
     3  EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE STATE EMPLOYEES'
     4  RETIREMENT SYSTEM, THE AGREED UPON SALARY DEDUCTIONS SHALL BE
     5  REMITTED TO THE STATE EMPLOYEES' RETIREMENT BOARD, WHICH SHALL
     6  CERTIFY AND TRANSFER TO THE BOARD THE AMOUNTS PAID. APPLICATION
     7  MAY BE FILED FOR ALL SUCH MILITARY SERVICE CREDIT UPON
     8  COMPLETION OF THREE YEARS OF SUBSEQUENT CREDITED SCHOOL SERVICE
     9  AND SHALL BE CREDITED AS CLASS T-C SERVICE.
    10     (C)  INTERVENING MILITARY SERVICE.--CONTRIBUTIONS ON ACCOUNT
    11  OF CREDIT FOR INTERVENING MILITARY SERVICE SHALL BE DETERMINED
    12  BY THE MEMBER'S BASIC CONTRIBUTION RATE AND COMPENSATION AT THE
    13  TIME OF ENTRY OF THE MEMBER INTO ACTIVE MILITARY SERVICE,
    14  TOGETHER WITH STATUTORY INTEREST DURING ALL PERIODS OF
    15  SUBSEQUENT SCHOOL AND STATE SERVICE TO DATE OF PURCHASE. UPON
    16  APPLICATION FOR SUCH CREDIT THE AMOUNT DUE SHALL BE CERTIFIED IN
    17  THE CASE OF EACH MEMBER BY THE BOARD, IN ACCORDANCE WITH METHODS
    18  APPROVED BY THE ACTUARY, AND CONTRIBUTIONS MAY BE MADE BY ONE OF
    19  THE FOLLOWING METHODS:
    20         (1)  REGULAR MONTHLY PAYMENTS DURING ACTIVE MILITARY
    21     SERVICE.
    22         (2)  A LUMP SUM PAYMENT WITHIN 90 DAYS OF CERTIFICATION
    23     OF THE AMOUNT DUE.
    24         (3)  SALARY DEDUCTIONS [OR PERSONAL CHECKS] IN AMOUNTS
    25     AGREED UPON BY THE MEMBER AND THE BOARD. THE SALARY DEDUCTION
    26     AMORTIZATION PLANS AGREED TO BY THE MEMBERS AND THE BOARD MAY
    27     INCLUDE A DEFERRAL OF PAYMENT AMOUNTS AND STATUTORY INTEREST
    28     UNTIL THE TERMINATION OF SCHOOL SERVICE OR STATE SERVICE, AS
    29     THE BOARD, IN ITS SOLE DISCRETION, DECIDES TO ALLOW. THE
    30     BOARD MAY LIMIT SALARY DEDUCTION AMORTIZATION PLANS TO SUCH
    20010H0026B1905                 - 32 -

     1     TERMS AS THE BOARD, IN ITS SOLE DISCRETION, DETERMINES. IN
     2     THE CASE OF AN ELIGIBLE STATE EMPLOYEE WHO IS AN ACTIVE
     3     MEMBER OF THE STATE EMPLOYEES' RETIREMENT SYSTEM, THE AGREED
     4     UPON SALARY DEDUCTIONS SHALL BE REMITTED TO THE STATE
     5     EMPLOYEES' RETIREMENT BOARD, WHICH SHALL CERTIFY AND TRANSFER
     6     TO THE BOARD THE AMOUNTS PAID.
     7     (D)  OTHER CREDITABLE NONSCHOOL SERVICE.--CONTRIBUTIONS ON
     8  ACCOUNT OF CLASS T-C CREDIT FOR CREDITABLE NONSCHOOL SERVICE
     9  OTHER THAN MILITARY SERVICE SHALL BE DETERMINED BY APPLYING THE
    10  MEMBER'S BASIC CONTRIBUTION RATE PLUS THE NORMAL CONTRIBUTION
    11  RATE AS PROVIDED IN SECTION 8328 AT THE TIME OF THE MEMBER'S
    12  ENTRY INTO SCHOOL SERVICE SUBSEQUENT TO SUCH CREDITABLE
    13  NONSCHOOL SERVICE TO HIS TOTAL COMPENSATION RECEIVED DURING THE
    14  FIRST YEAR OF SUBSEQUENT CREDITED SCHOOL SERVICE AND MULTIPLYING
    15  THE PRODUCT BY THE NUMBER OF YEARS AND FRACTIONAL PART OF A YEAR
    16  OF CREDITABLE NONSCHOOL SERVICE BEING PURCHASED TOGETHER WITH
    17  STATUTORY INTEREST DURING ALL PERIODS OF SUBSEQUENT SCHOOL OR
    18  STATE SERVICE TO THE DATE OF PURCHASE, EXCEPT THAT IN THE CASE
    19  OF PURCHASE OF CREDIT FOR CREDITABLE NONSCHOOL SERVICE AS SET
    20  FORTH IN SECTION 8304(B)(5) (RELATING TO CREDITABLE NONSCHOOL
    21  SERVICE) THE MEMBER SHALL PAY ONLY THE EMPLOYEE'S SHARE UNLESS
    22  OTHERWISE PROVIDED BY LAW. UPON CERTIFICATION OF THE AMOUNT DUE,
    23  PAYMENT MAY BE MADE IN A LUMP SUM WITHIN 90 DAYS OR IN THE CASE
    24  OF AN ACTIVE MEMBER OR AN ELIGIBLE STATE EMPLOYEE WHO IS AN
    25  ACTIVE MEMBER OF THE STATE EMPLOYEES' RETIREMENT SYSTEM IT MAY
    26  BE AMORTIZED WITH STATUTORY INTEREST THROUGH SALARY DEDUCTIONS
    27  [OR BY PERSONAL CHECKS] IN AMOUNTS AGREED UPON BY THE MEMBER AND
    28  THE BOARD. THE SALARY DEDUCTION AMORTIZATION PLANS AGREED TO BY
    29  THE MEMBERS AND THE BOARD MAY INCLUDE A DEFERRAL OF PAYMENT
    30  AMOUNTS AND STATUTORY INTEREST UNTIL THE TERMINATION OF SCHOOL
    20010H0026B1905                 - 33 -

     1  SERVICE OR STATE SERVICE, AS THE BOARD, IN ITS SOLE DISCRETION,
     2  DECIDES TO ALLOW. THE BOARD MAY LIMIT SALARY DEDUCTION
     3  AMORTIZATION PLANS TO SUCH TERMS AS THE BOARD, IN ITS SOLE
     4  DISCRETION, DETERMINES. IN THE CASE OF AN ELIGIBLE STATE
     5  EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE STATE EMPLOYEES'
     6  RETIREMENT SYSTEM, THE AGREED UPON SALARY DEDUCTIONS SHALL BE
     7  REMITTED TO THE STATE EMPLOYEES' RETIREMENT BOARD, WHICH SHALL
     8  CERTIFY AND TRANSFER TO THE BOARD THE AMOUNTS PAID.
     9     * * *
    10  § 8325.  INCOMPLETE PAYMENTS.
    11     IN THE EVENT THAT A MEMBER TERMINATES SCHOOL SERVICE OR A
    12  MULTIPLE SERVICE MEMBER WHO IS AN ACTIVE MEMBER OF THE STATE
    13  EMPLOYEES' RETIREMENT SYSTEM TERMINATES STATE SERVICE BEFORE ANY
    14  AGREED UPON PAYMENTS OR RETURN OF BENEFITS ON ACCOUNT OF
    15  RETURNING TO SCHOOL SERVICE OR ENTERING STATE SERVICE AND
    16  ELECTING MULTIPLE SERVICE HAVE BEEN COMPLETED THE MEMBER OR
    17  MULTIPLE SERVICE MEMBER WHO IS AN ACTIVE MEMBER OF THE STATE
    18  EMPLOYEES' RETIREMENT SYSTEM SHALL HAVE THE RIGHT TO PAY WITHIN
    19  30 DAYS OF TERMINATION OF SCHOOL SERVICE OR STATE SERVICE THE
    20  BALANCE DUE, INCLUDING INTEREST, IN A LUMP SUM AND THE ANNUITY
    21  SHALL BE CALCULATED INCLUDING FULL CREDIT FOR THE PREVIOUS
    22  SCHOOL SERVICE, CREDITABLE NONSCHOOL SERVICE, OR FULL-COVERAGE
    23  MEMBERSHIP. IN THE EVENT A MEMBER DOES NOT PAY THE BALANCE DUE
    24  WITHIN 30 DAYS OF TERMINATION OF SCHOOL SERVICE OR IN THE EVENT
    25  A MEMBER DIES IN SCHOOL SERVICE OR WITHIN 30 DAYS OF TERMINATION
    26  OF SCHOOL SERVICE OR IN THE CASE OF A MULTIPLE SERVICE MEMBER
    27  WHO IS AN ACTIVE MEMBER OF THE STATE EMPLOYEES' RETIREMENT
    28  SYSTEM, DOES NOT PAY THE BALANCE DUE WITHIN 30 DAYS OF
    29  TERMINATION OF STATE SERVICE OR DIES IN STATE SERVICE OR WITHIN
    30  30 DAYS OF TERMINATION OF STATE SERVICE AND BEFORE THE AGREED
    20010H0026B1905                 - 34 -

     1  UPON PAYMENTS HAVE BEEN COMPLETED, THE PRESENT VALUE OF THE
     2  BENEFIT OTHERWISE PAYABLE SHALL BE REDUCED BY THE BALANCE DUE,
     3  INCLUDING INTEREST, AND THE BENEFIT PAYABLE SHALL BE CALCULATED
     4  AS THE ACTUARIAL EQUIVALENT OF SUCH REDUCED PRESENT VALUE.
     5  § 8327.  PAYMENTS BY EMPLOYERS.
     6     * * *
     7     (B)  DEDUCTION FROM APPROPRIATIONS.--
     8         (1)  TO FACILITATE THE PAYMENT OF AMOUNTS DUE FROM ANY
     9     EMPLOYER TO THE FUND THROUGH THE STATE TREASURER AND TO
    10     PERMIT THE EXCHANGE OF CREDITS BETWEEN THE STATE TREASURER
    11     AND ANY EMPLOYER, THE SECRETARY OF EDUCATION AND THE STATE
    12     TREASURER SHALL CAUSE TO BE DEDUCTED AND PAID INTO THE FUND
    13     FROM THE AMOUNT OF ANY MONEYS DUE TO ANY EMPLOYER ON ACCOUNT
    14     OF ANY APPROPRIATION FOR SCHOOLS OR OTHER PURPOSES [SUCH
    15     AMOUNT DUE], AMOUNTS EQUAL TO THE EMPLOYER AND PICKUP
    16     CONTRIBUTIONS WHICH AN EMPLOYER IS REQUIRED TO PAY TO THE
    17     FUND, AS CERTIFIED BY THE BOARD, AND AS REMAINS UNPAID ON THE
    18     DATE SUCH APPROPRIATIONS WOULD OTHERWISE BE PAID TO THE
    19     EMPLOYER[, AND SUCH]. SUCH AMOUNT SHALL BE CREDITED TO THE
    20     [EMPLOYER'S ACCOUNT] APPROPRIATE ACCOUNTS IN THE FUND.
    21         (2)  TO FACILITATE THE PAYMENTS OF AMOUNTS DUE FROM ANY
    22     CHARTER SCHOOL, AS DEFINED IN ARTICLE XVII-A OF THE ACT OF
    23     MARCH 10, 1949 (P.L.30, NO.14), KNOWN AS THE PUBLIC SCHOOL
    24     CODE OF 1949, TO THE FUND THROUGH THE STATE TREASURER AND TO
    25     PERMIT THE EXCHANGE OF CREDITS BETWEEN THE STATE TREASURER
    26     AND ANY EMPLOYER, THE SECRETARY OF EDUCATION AND THE STATE
    27     TREASURER SHALL CAUSE TO BE DEDUCTED AND PAID INTO THE FUND
    28     FROM ANY FUNDS APPROPRIATED TO THE DEPARTMENT OF EDUCATION
    29     FOR BASIC EDUCATION OF THE CHARTERING SCHOOL DISTRICT OF A
    30     CHARTER SCHOOL AND PUBLIC SCHOOL EMPLOYEES' RETIREMENT
    20010H0026B1905                 - 35 -

     1     CONTRIBUTIONS, AMOUNTS EQUAL TO THE EMPLOYER AND PICKUP
     2     CONTRIBUTIONS WHICH A CHARTER SCHOOL IS REQUIRED TO PAY TO
     3     THE FUND, AS CERTIFIED BY THE BOARD, AND AS REMAINS UNPAID ON
     4     THE DATE SUCH APPROPRIATIONS WOULD OTHERWISE BE PAID TO THE
     5     CHARTERING SCHOOL DISTRICT OR CHARTER SCHOOL. SUCH AMOUNTS
     6     SHALL BE CREDITED TO THE APPROPRIATE ACCOUNTS IN THE FUND.
     7     ANY REDUCTION IN PAYMENTS TO A CHARTERING SCHOOL DISTRICT
     8     MADE PURSUANT TO THIS SECTION SHALL BE DEDUCTED FROM THE
     9     AMOUNT DUE TO THE CHARTER SCHOOL DISTRICT PURSUANT TO THE
    10     PUBLIC SCHOOL CODE OF 1949.
    11     * * *
    12  § 8328.  ACTUARIAL COST METHOD.
    13     * * *
    14     (B)  NORMAL CONTRIBUTION RATE.--THE NORMAL CONTRIBUTION RATE
    15  SHALL BE DETERMINED AFTER EACH ACTUARIAL VALUATION. UNTIL ALL
    16  ACCRUED LIABILITY CONTRIBUTIONS HAVE BEEN COMPLETED, THE NORMAL
    17  CONTRIBUTION RATE SHALL BE DETERMINED, ON THE BASIS OF AN ANNUAL
    18  INTEREST RATE AND SUCH MORTALITY AND OTHER TABLES AS SHALL BE
    19  ADOPTED BY THE BOARD IN ACCORDANCE WITH GENERALLY ACCEPTED
    20  ACTUARIAL PRINCIPLES, AS A LEVEL PERCENTAGE OF THE COMPENSATION
    21  OF THE AVERAGE NEW ACTIVE MEMBER, WHICH PERCENTAGE, IF
    22  CONTRIBUTED ON THE BASIS OF HIS PROSPECTIVE COMPENSATION THROUGH
    23  THE ENTIRE PERIOD OF ACTIVE SCHOOL SERVICE, WOULD BE SUFFICIENT
    24  TO FUND THE LIABILITY FOR ANY PROSPECTIVE BENEFIT PAYABLE TO
    25  HIM, IN EXCESS OF THAT PORTION FUNDED BY HIS PROSPECTIVE MEMBER
    26  CONTRIBUTIONS, EXCEPT FOR THE SUPPLEMENTAL BENEFITS PROVIDED IN
    27  SECTIONS 8348 (RELATING TO SUPPLEMENTAL ANNUITIES), 8348.1
    28  (RELATING TO ADDITIONAL SUPPLEMENTAL ANNUITIES), 8348.2
    29  (RELATING TO FURTHER ADDITIONAL SUPPLEMENTAL ANNUITIES) [AND],
    30  8348.3 (RELATING TO SUPPLEMENTAL ANNUITIES COMMENCING 1994),
    20010H0026B1905                 - 36 -

     1  8348.4 (RELATING TO SPECIAL SUPPLEMENTAL POSTRETIREMENT
     2  ADJUSTMENT) AND 8348.5 (RELATING TO SUPPLEMENTAL ANNUITIES
     3  COMMENCING 1998).
     4     (C)  ACCRUED LIABILITY CONTRIBUTION RATE.--FOR THE FISCAL
     5  YEAR BEGINNING JULY 1, [1991] 2002, THE ACCRUED LIABILITY
     6  CONTRIBUTION RATE SHALL BE COMPUTED AS THE RATE OF TOTAL
     7  COMPENSATION OF ALL ACTIVE MEMBERS WHICH SHALL BE CERTIFIED BY
     8  THE ACTUARY AS SUFFICIENT TO FUND OVER A PERIOD OF [20] TEN
     9  YEARS FROM JULY 1, [1991] 2002, THE PRESENT VALUE OF THE
    10  LIABILITIES FOR ALL PROSPECTIVE BENEFITS OF ACTIVE MEMBERS,
    11  EXCEPT FOR THE SUPPLEMENTAL BENEFITS PROVIDED IN SECTIONS 8348,
    12  8348.1, 8348.2 [AND], 8348.3, 8348.4 AND 8348.5, IN EXCESS OF
    13  THE TOTAL ASSETS IN THE FUND, EXCLUDING THE BALANCE IN THE
    14  ANNUITY RESERVE ACCOUNT, AND OF THE PRESENT VALUE OF NORMAL
    15  CONTRIBUTIONS AND OF MEMBER CONTRIBUTIONS PAYABLE WITH RESPECT
    16  TO ALL ACTIVE MEMBERS ON JULY 1, [1991] 2002, DURING THE
    17  REMAINDER OF THEIR ACTIVE SERVICE. THEREAFTER, THE AMOUNT OF
    18  EACH ANNUAL ACCRUED LIABILITY CONTRIBUTION SHALL BE [5% GREATER
    19  THAN] EQUAL TO THE AMOUNT OF SUCH CONTRIBUTION FOR THE
    20  [PREVIOUS] FISCAL YEAR, BEGINNING JULY 1, 2002, EXCEPT THAT, IF
    21  THE ACCRUED LIABILITY IS INCREASED BY LEGISLATION ENACTED
    22  SUBSEQUENT TO [JULY 1, 1991] JUNE 30, 2002, SUCH ADDITIONAL
    23  LIABILITY SHALL BE FUNDED OVER A PERIOD OF [20] TEN YEARS FROM
    24  THE FIRST DAY OF JULY, COINCIDENT WITH OR NEXT FOLLOWING THE
    25  EFFECTIVE DATE OF THE INCREASE[, PROVIDED THAT THE LIABILITY FOR
    26  ANY ADDITIONAL BENEFITS CREATED BY THIS ACT, EXCEPT FOR THE
    27  HEALTH INSURANCE PREMIUM ASSISTANCE PROGRAM ESTABLISHED IN
    28  SECTION 8509 (RELATING TO HEALTH INSURANCE PREMIUM ASSISTANCE
    29  PROGRAM), SHALL BE FUNDED OVER A PERIOD OF 20 YEARS COMMENCING
    30  JULY 1, 1992]. THE AMOUNT OF EACH ANNUAL ACCRUED LIABILITY
    20010H0026B1905                 - 37 -

     1  CONTRIBUTION FOR SUCH ADDITIONAL LEGISLATIVE LIABILITIES SHALL
     2  BE [5% GREATER THAN] EQUAL TO THE AMOUNT OF SUCH CONTRIBUTION
     3  FOR THE [PREVIOUS FISCAL YEAR] FIRST ANNUAL PAYMENT.
     4     (D)  SUPPLEMENTAL ANNUITY CONTRIBUTION RATE.--CONTRIBUTIONS
     5  FROM THE COMMONWEALTH AND OTHER EMPLOYERS REQUIRED TO PROVIDE
     6  FOR THE PAYMENT OF THE SUPPLEMENTAL ANNUITIES PROVIDED FOR IN
     7  SECTIONS 8348, 8348.1 [AND], 8348.2, 8348.4 AND 8348.5 SHALL BE
     8  PAID OVER A PERIOD OF [20] TEN YEARS FROM JULY 1, [1991] 2002.
     9  THE AMOUNT OF EACH ANNUAL SUPPLEMENTAL ANNUITIES CONTRIBUTION
    10  SHALL BE [5% GREATER THAN] EQUAL TO THE AMOUNT OF SUCH
    11  CONTRIBUTION FOR THE [PREVIOUS] FISCAL YEAR BEGINNING JULY 1,
    12  2002. IN THE EVENT THAT SUPPLEMENTAL ANNUITIES ARE INCREASED BY
    13  LEGISLATION ENACTED SUBSEQUENT TO [JULY 1, 1991] JUNE 30, 2002,
    14  THE ADDITIONAL LIABILITY FOR THE INCREASED BENEFITS SHALL BE
    15  FUNDED IN EQUAL DOLLAR ANNUAL INSTALLMENTS [INCREASING BY 5%
    16  EACH YEAR] OVER A PERIOD OF [20] TEN YEARS FROM THE JULY 1,
    17  COINCIDENT WITH OR NEXT FOLLOWING THE EFFECTIVE DATE OF SUCH
    18  LEGISLATION. [NOTWITHSTANDING THE PRECEDING, THE FUNDING FOR THE
    19  SUPPLEMENTAL ANNUITIES COMMENCING 1994 PROVIDED FOR IN SECTION
    20  8348.3 SHALL BE AS PROVIDED IN SECTION 8348.3(F).]
    21     (E)  EXPERIENCE ADJUSTMENT FACTOR.--FOR EACH YEAR AFTER THE
    22  ESTABLISHMENT OF THE ACCRUED LIABILITY CONTRIBUTION RATE FOR THE
    23  FISCAL YEAR BEGINNING JULY 1, [1991] 2002, ANY INCREASE OR
    24  DECREASE IN THE ACCRUED LIABILITY (INCLUDING LIABILITY FOR
    25  SUPPLEMENTAL ANNUITIES) DUE TO ACTUAL EXPERIENCE DIFFERING FROM
    26  ASSUMED EXPERIENCE, CHANGES IN ACTUARIAL ASSUMPTIONS, CHANGES IN
    27  THE TERMS AND CONDITIONS OF THE BENEFITS PROVIDED BY THE SYSTEM
    28  BY JUDICIAL, ADMINISTRATIVE OR OTHER PROCESSES OTHER THAN
    29  LEGISLATION, INCLUDING, BUT NOT LIMITED TO, REINTERPRETATION OF
    30  THE PROVISIONS OF THIS PART, SHALL BE AMORTIZED IN EQUAL DOLLAR
    20010H0026B1905                 - 38 -

     1  ANNUAL INSTALLMENTS [INCREASING BY 5% EACH YEAR] OVER A PERIOD
     2  OF [20] TEN YEARS BEGINNING WITH THE JULY 1 SECOND SUCCEEDING
     3  THE ACTUARIAL VALUATION.
     4     * * *
     5     SECTION 2.1.  SECTIONS 8342 AND 8344 OF TITLE 24 ARE AMENDED
     6  BY ADDING SUBSECTIONS TO READ:
     7  § 8342.  MAXIMUM SINGLE LIFE ANNUITY.
     8     * * *
     9     (C)  LIMITATION REGARDING ANNUAL BENEFIT UNDER IRC §
    10  415(B).--NOTWITHSTANDING ANY PROVISION OF THIS PART TO THE
    11  CONTRARY, NO BENEFIT SHALL BE PAYABLE TO THE EXTENT THAT SUCH
    12  BENEFIT EXCEEDS ANY LIMITATION UNDER IRC § 415(B) IN EFFECT WITH
    13  RESPECT TO GOVERNMENTAL PLANS, AS SUCH TERM IS DEFINED IN IRC §
    14  414(D), ON THE DATE THE BENEFIT PAYMENT BECOMES EFFECTIVE.
    15  § 8344.  DISABILITY ANNUITIES.
    16     * * *
    17     (E)  LIMITATION REGARDING ANNUAL BENEFIT UNDER IRC §
    18  415(B).--NOTWITHSTANDING ANY PROVISION OF THIS PART TO THE
    19  CONTRARY, NO BENEFIT SHALL BE PAYABLE TO THE EXTENT THAT SUCH
    20  BENEFIT EXCEEDS ANY LIMITATION UNDER IRC § 415(B) IN EFFECT WITH
    21  RESPECT TO GOVERNMENTAL PLANS, AS SUCH TERM IS DEFINED IN IRC §
    22  414(D), ON THE DATE THE BENEFIT PAYMENT BECOMES EFFECTIVE.
    23     SECTION 2.2.  SECTION 8345(A) OF TITLE 24 IS AMENDED TO READ:
    24  § 8345.  MEMBER'S OPTIONS.
    25     (A)  GENERAL RULE.--ANY VESTEE WITH [TEN] FIVE OR MORE
    26  ELIGIBILITY POINTS OR ANY OTHER ELIGIBLE MEMBER UPON TERMINATION
    27  OF SCHOOL SERVICE WHO HAS NOT WITHDRAWN HIS ACCUMULATED
    28  DEDUCTIONS AS PROVIDED IN SECTION 8341 (RELATING TO RETURN OF
    29  ACCUMULATED DEDUCTIONS) MAY APPLY FOR AND ELECT TO RECEIVE
    30  EITHER A MAXIMUM SINGLE LIFE ANNUITY, AS CALCULATED IN
    20010H0026B1905                 - 39 -

     1  ACCORDANCE WITH THE PROVISIONS OF SECTION 8342 (RELATING TO
     2  MAXIMUM SINGLE LIFE ANNUITY), OR A REDUCED ANNUITY CERTIFIED BY
     3  THE ACTUARY TO BE ACTUARIALLY EQUIVALENT TO THE MAXIMUM SINGLE
     4  LIFE ANNUITY AND IN ACCORDANCE WITH ONE OF THE FOLLOWING
     5  OPTIONS, EXCEPT THAT NO MEMBER SHALL ELECT AN ANNUITY PAYABLE TO
     6  ONE OR MORE SURVIVOR ANNUITANTS OTHER THAN HIS SPOUSE OR
     7  ALTERNATE PAYEE OF SUCH A MAGNITUDE THAT THE PRESENT VALUE OF
     8  THE ANNUITY PAYABLE TO HIM FOR LIFE PLUS ANY LUMP SUM PAYMENT HE
     9  MAY HAVE ELECTED TO RECEIVE IS LESS THAN 50% OF THE PRESENT
    10  VALUE OF HIS MAXIMUM SINGLE LIFE ANNUITY.
    11         (1)  OPTION 1.--A LIFE ANNUITY TO THE MEMBER WITH A
    12     GUARANTEED TOTAL PAYMENT EQUAL TO THE PRESENT VALUE OF THE
    13     MAXIMUM SINGLE LIFE ANNUITY ON THE EFFECTIVE DATE OF
    14     RETIREMENT WITH THE PROVISION THAT, IF, AT HIS DEATH, HE HAS
    15     RECEIVED LESS THAN SUCH PRESENT VALUE, THE UNPAID BALANCE
    16     SHALL BE PAYABLE TO HIS BENEFICIARY.
    17         (2)  OPTION 2.--A JOINT AND SURVIVOR ANNUITY PAYABLE
    18     DURING THE LIFETIME OF THE MEMBER WITH THE FULL AMOUNT OF
    19     SUCH ANNUITY PAYABLE THEREAFTER TO HIS SURVIVOR ANNUITANT, IF
    20     LIVING AT HIS DEATH.
    21         (3)  OPTION 3.--A JOINT AND FIFTY PERCENT (50%) SURVIVOR
    22     ANNUITY PAYABLE DURING THE LIFETIME OF THE MEMBER WITH ONE-
    23     HALF OF SUCH ANNUITY PAYABLE THEREAFTER TO HIS SURVIVOR
    24     ANNUITANT, IF LIVING AT HIS DEATH.
    25         (4)  OPTION 4.--SOME OTHER BENEFIT WHICH SHALL BE
    26     CERTIFIED BY THE ACTUARY TO BE ACTUARIALLY EQUIVALENT TO THE
    27     MAXIMUM SINGLE LIFE ANNUITY, SUBJECT TO THE FOLLOWING
    28     RESTRICTIONS:
    29             (I)  ANY ANNUITY SHALL BE PAYABLE WITHOUT REDUCTION
    30         DURING THE LIFETIME OF THE MEMBER.
    20010H0026B1905                 - 40 -

     1             (II)  THE SUM OF ALL ANNUITIES PAYABLE TO THE
     2         DESIGNATED SURVIVOR ANNUITANTS SHALL NOT BE GREATER THAN
     3         ONE AND ONE-HALF TIMES THE ANNUITY PAYABLE TO THE MEMBER.
     4             (III)  A PORTION OF THE BENEFIT MAY BE PAYABLE AS A
     5         LUMP SUM, EXCEPT THAT SUCH LUMP SUM PAYMENT SHALL NOT
     6         EXCEED AN AMOUNT EQUAL TO THE ACCUMULATED DEDUCTIONS
     7         STANDING TO THE CREDIT OF THE MEMBER. THE BALANCE OF THE
     8         PRESENT VALUE OF THE MAXIMUM SINGLE LIFE ANNUITY ADJUSTED
     9         IN ACCORDANCE WITH SECTION 8342(B) SHALL BE PAID IN THE
    10         FORM OF AN ANNUITY WITH A GUARANTEED TOTAL PAYMENT, A
    11         SINGLE LIFE ANNUITY, OR A JOINT AND SURVIVOR ANNUITY OR
    12         ANY COMBINATION THEREOF BUT SUBJECT TO THE RESTRICTIONS
    13         OF SUBPARAGRAPHS (I) AND (II) OF THIS PARAGRAPH.
    14     * * *
    15     SECTION 3.  SECTION 8346(A) AND (D) OF TITLE 24 IS AMENDED
    16  AND THE SECTION IS AMENDED BY ADDING A SUBSECTION TO READ:
    17  § 8346.  TERMINATION OF ANNUITIES.
    18     (A)  GENERAL RULE.--IF AN ANNUITANT RETURNS TO SCHOOL SERVICE
    19  OR ENTERS OR HAS ENTERED STATE SERVICE AND ELECTS MULTIPLE
    20  SERVICE MEMBERSHIP, ANY ANNUITY PAYABLE TO HIM UNDER THIS PART
    21  SHALL CEASE EFFECTIVE UPON THE DATE OF HIS RETURN TO SCHOOL
    22  SERVICE OR ENTERING STATE SERVICE AND IN THE CASE OF AN ANNUITY
    23  OTHER THAN A DISABILITY ANNUITY THE PRESENT VALUE OF SUCH
    24  ANNUITY, ADJUSTED FOR FULL COVERAGE IN THE CASE OF A JOINT
    25  COVERAGE MEMBER WHO MAKES THE APPROPRIATE BACK CONTRIBUTIONS FOR
    26  FULL COVERAGE, SHALL BE FROZEN AS OF THE DATE SUCH ANNUITY
    27  CEASES. AN ANNUITANT WHO IS CREDITED WITH AN ADDITIONAL 10% OF
    28  MEMBERSHIP SERVICE AS PROVIDED IN SECTION 8302(B.2) (RELATING TO
    29  CREDITED SCHOOL SERVICE) AND WHO RETURNS TO SCHOOL SERVICE,
    30  EXCEPT AS PROVIDED IN SUBSECTION (B), SHALL FORFEIT SUCH
    20010H0026B1905                 - 41 -

     1  CREDITED SERVICE AND SHALL HAVE HIS FROZEN PRESENT VALUE
     2  ADJUSTED AS IF HIS 10% RETIREMENT INCENTIVE HAD NOT BEEN APPLIED
     3  TO HIS ACCOUNT. IN THE EVENT THAT THE COST-OF-LIVING INCREASE
     4  ENACTED DECEMBER 18, 1979, OCCURRED DURING THE PERIOD OF SUCH
     5  STATE OR SCHOOL EMPLOYMENT, THE FROZEN PRESENT VALUE SHALL BE
     6  INCREASED, ON OR AFTER THE MEMBER ATTAINS SUPERANNUATION AGE, BY
     7  THE PERCENT APPLICABLE HAD HE NOT RETURNED TO SERVICE.
     8     (A.1)  RETURN OF BENEFITS.--IN THE EVENT AN ANNUITANT WHOSE
     9  ANNUITY CEASES PURSUANT TO THIS SECTION RECEIVES ANY ANNUITY
    10  PAYMENT, INCLUDING A LUMP SUM PAYMENT PURSUANT TO SECTION 8345
    11  (RELATING TO MEMBER'S OPTIONS) ON OR AFTER THE DATE OF HIS
    12  RETURN TO SCHOOL SERVICE OR ENTERING STATE SERVICE, THE
    13  ANNUITANT SHALL RETURN TO THE BOARD THE AMOUNT SO RECEIVED PLUS
    14  STATUTORY INTEREST. THE AMOUNT PAYABLE SHALL BE CERTIFIED IN
    15  EACH CASE BY THE BOARD IN ACCORDANCE WITH METHODS APPROVED BY
    16  THE ACTUARY AND SHALL BE PAID IN A LUMP SUM WITHIN 90 DAYS OR IN
    17  THE CASE OF AN ACTIVE MEMBER OR A STATE EMPLOYEE WHO IS AN
    18  ACTIVE MEMBER OF THE STATE EMPLOYEES' RETIREMENT SYSTEM MAY BE
    19  AMORTIZED WITH STATUTORY INTEREST THROUGH SALARY DEDUCTIONS IN
    20  AMOUNTS AGREED UPON BY THE MEMBER AND THE BOARD. IN THE CASE OF
    21  A STATE EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE STATE EMPLOYEES'
    22  RETIREMENT SYSTEM, THE AGREED UPON SALARY DEDUCTIONS SHALL BE
    23  REMITTED TO THE STATE EMPLOYEES' RETIREMENT BOARD, WHICH SHALL
    24  CERTIFY AND TRANSFER TO THE BOARD THE AMOUNTS PAID.
    25     * * *
    26     (D)  ELIMINATION OF THE EFFECT OF FROZEN PRESENT VALUE.--
    27         (1)  AN ANNUITANT WHO RETURNS TO SCHOOL SERVICE AND EARNS
    28     THREE ELIGIBILITY POINTS BY PERFORMING CREDITED SCHOOL
    29     SERVICE FOLLOWING THE MOST RECENT PERIOD OF RECEIPT OF AN
    30     ANNUITY UNDER THIS PART, OR AN ANNUITANT WHO ENTERS STATE
    20010H0026B1905                 - 42 -

     1     SERVICE AND:
     2             (I)  IS A MULTIPLE SERVICE MEMBER; OR
     3             (II)  WHO ELECTS MULTIPLE SERVICE MEMBERSHIP, AND
     4     EARNS THREE ELIGIBILITY POINTS BY PERFORMING CREDITED STATE
     5     SERVICE OR CREDITED SCHOOL SERVICE FOLLOWING THE MOST RECENT
     6     PERIOD OF RECEIPT OF AN ANNUITY UNDER THIS PART, AND WHO HAD
     7     THE PRESENT VALUE OF HIS ANNUITY FROZEN IN ACCORDANCE WITH
     8     SUBSECTION (A), SHALL QUALIFY TO HAVE THE EFFECT OF THE
     9     FROZEN PRESENT VALUE RESULTING FROM ALL PREVIOUS PERIODS OF
    10     RETIREMENT ELIMINATED, PROVIDED THAT ALL PAYMENTS UNDER
    11     OPTION 4 AND ANNUITY PAYMENTS PAYABLE DURING PREVIOUS PERIODS
    12     OF RETIREMENT PLUS INTEREST AS SET FORTH IN PARAGRAPH (3)
    13     SHALL BE RETURNED TO THE FUND IN THE FORM OF AN ACTUARIAL
    14     ADJUSTMENT TO HIS SUBSEQUENT BENEFITS OR IN SUCH FORM AS THE
    15     BOARD MAY OTHERWISE DIRECT.
    16         (2)  UPON SUBSEQUENT DISCONTINUANCE OF SERVICE AND THE
    17     FILING OF AN APPLICATION FOR AN ANNUITY, A FORMER ANNUITANT
    18     WHO QUALIFIES TO HAVE THE EFFECT OF A FROZEN PRESENT VALUE
    19     ELIMINATED UNDER THIS SUBSECTION SHALL BE ENTITLED TO RECEIVE
    20     THE HIGHER OF EITHER:
    21             (I)  AN ANNUITY (PRIOR TO OPTIONAL MODIFICATION)
    22         CALCULATED AS IF THE FREEZING OF THE FORMER ANNUITANT'S
    23         ACCOUNT PURSUANT TO SUBSECTION (A) HAD NOT OCCURRED,
    24         ADJUSTED BY CREDITING CLASS T-C SCHOOL SERVICE AS CLASS
    25         T-D SERVICE AS PROVIDED FOR IN SECTION 8305(C) (RELATING
    26         TO CLASSES OF SERVICE) AND FURTHER ADJUSTED ACCORDING TO
    27         PARAGRAPH (3), PROVIDED THAT A FORMER ANNUITANT OF THE
    28         SYSTEM OR A FORMER ANNUITANT OF THE STATE EMPLOYEES'
    29         RETIREMENT SYSTEM WHO RETIRED UNDER A PROVISION OF LAW
    30         GRANTING ADDITIONAL SERVICE CREDIT IF TERMINATION OF
    20010H0026B1905                 - 43 -

     1         SCHOOL OR STATE SERVICE OR RETIREMENT OCCURRED DURING A
     2         SPECIFIC PERIOD OF TIME SHALL NOT BE PERMITTED TO RETAIN
     3         THE ADDITIONAL SERVICE CREDIT UNDER THE PRIOR LAW WHEN
     4         THE ANNUITY IS COMPUTED FOR HIS MOST RECENT RETIREMENT;
     5         OR
     6             (II)  AN ANNUITY (PRIOR TO OPTIONAL MODIFICATION)
     7         CALCULATED AS IF THE FORMER ANNUITANT DID NOT QUALIFY TO
     8         HAVE THE EFFECT ON THE FROZEN PRESENT VALUE ELIMINATED,
     9     UNLESS THE FORMER ANNUITANT NOTIFIES THE BOARD IN WRITING BY
    10     THE LATER OF THE DATE THE APPLICATION FOR ANNUITY IS FILED OR
    11     THE EFFECTIVE DATE OF RETIREMENT THAT THE FORMER ANNUITANT
    12     WISHES TO RECEIVE THE LOWER ANNUITY.
    13         (3)  IN ADDITION TO ANY OTHER ADJUSTMENT TO THE PRESENT
    14     VALUE OF THE MAXIMUM SINGLE LIFE ANNUITY THAT A MEMBER MAY BE
    15     ENTITLED TO RECEIVE THAT OCCURS AS A RESULT OF ANY OTHER
    16     PROVISION OF LAW, THE PRESENT VALUE OF THE MAXIMUM SINGLE
    17     LIFE ANNUITY SHALL BE REDUCED BY ALL AMOUNTS PAID OR PAYABLE
    18     TO HIM DURING ALL PREVIOUS PERIODS OF RETIREMENT PLUS
    19     INTEREST ON THESE AMOUNTS UNTIL THE DATE OF SUBSEQUENT
    20     RETIREMENT. THE INTEREST FOR EACH YEAR SHALL BE CALCULATED
    21     BASED UPON THE ANNUAL INTEREST RATE ADOPTED FOR THAT SCHOOL
    22     YEAR BY THE BOARD FOR THE CALCULATION OF THE NORMAL
    23     CONTRIBUTION RATE PURSUANT TO SECTION 8328(B) (RELATING TO
    24     ACTUARIAL COST METHOD).
    25     SECTION 4.  SECTIONS 8348.1(F), 8348.2(F), 8348.3(F),
    26  8348.5(F), 8501(A) AND (B), 8502(M) AND 8502.1 OF TITLE 24 ARE
    27  AMENDED TO READ:
    28  § 8348.1.  ADDITIONAL SUPPLEMENTAL ANNUITIES.
    29     * * *
    30     (F)  FUNDING.--THE ACTUARY SHALL ANNUALLY CERTIFY THE AMOUNT
    20010H0026B1905                 - 44 -

     1  OF COMMONWEALTH APPROPRIATIONS FOR THE NEXT FISCAL YEAR NEEDED
     2  TO FUND, OVER A PERIOD OF [20] TEN YEARS FROM JULY 1, [1991]
     3  2002, THE ADDITIONAL MONTHLY SUPPLEMENTAL ANNUITY PROVIDED FOR
     4  IN THIS SECTION. THE BOARD SHALL SUBMIT THE ACTUARY'S
     5  CERTIFICATION TO THE SECRETARY OF THE BUDGET ON OR BEFORE
     6  NOVEMBER 1 OF EACH YEAR. IF, IN ANY YEAR AFTER 1984, THE AMOUNT
     7  CERTIFIED IS DISAPPROVED UNDER SECTION 610 OF THE ACT OF APRIL
     8  9, 1929 (P.L.177, NO.175), KNOWN AS THE ADMINISTRATIVE CODE OF
     9  1929, AS INSUFFICIENT TO MEET THE FUNDING REQUIREMENTS OF THIS
    10  SUBSECTION OR IS NOT APPROPRIATED ON OR BEFORE JULY 1, THE
    11  ADDITIONAL SUPPLEMENTAL ANNUITY PROVIDED FOR IN THIS SECTION
    12  SHALL BE SUSPENDED UNTIL SUCH TIME AS AN AMOUNT CERTIFIED AND
    13  APPROVED AS SUFFICIENT IS APPROPRIATED.
    14     * * *
    15  § 8348.2.  FURTHER ADDITIONAL SUPPLEMENTAL ANNUITIES.
    16     * * *
    17     (F)  FUNDING.--THE ACTUARY SHALL ANNUALLY ESTIMATE THE AMOUNT
    18  OF COMMONWEALTH APPROPRIATIONS FOR THE NEXT FISCAL YEAR NEEDED
    19  TO FUND, OVER A PERIOD OF [20] TEN YEARS FROM JULY 1, [1991]
    20  2002, THE ADDITIONAL MONTHLY SUPPLEMENTAL ANNUITY PROVIDED FOR
    21  IN THIS SECTION. THE BOARD SHALL SUBMIT THE ACTUARY'S ESTIMATION
    22  TO THE SECRETARY OF THE BUDGET ON OR BEFORE NOVEMBER 1 OF EACH
    23  YEAR. IF, IN ANY YEAR AFTER 1988, THE AMOUNT ESTIMATED IS
    24  DISAPPROVED UNDER SECTION 610 OF THE ACT OF APRIL 9, 1929
    25  (P.L.177, NO.175), KNOWN AS THE ADMINISTRATIVE CODE OF 1929, AS
    26  INSUFFICIENT TO MEET THE FUNDING REQUIREMENTS OF THIS SUBSECTION
    27  OR IS NOT APPROPRIATED ON OR BEFORE JULY 1, THE ADDITIONAL
    28  SUPPLEMENTAL ANNUITY PROVIDED FOR IN THIS SECTION SHALL BE
    29  SUSPENDED UNTIL SUCH TIME AS AN AMOUNT CERTIFIED AND APPROVED AS
    30  SUFFICIENT IS APPROPRIATED.
    20010H0026B1905                 - 45 -

     1     * * *
     2  § 8348.3.  SUPPLEMENTAL ANNUITIES COMMENCING 1994.
     3     * * *
     4     (F)  FUNDING.--[NOTWITHSTANDING SECTION 8328(D) (RELATING TO
     5  ACTUARIAL COST METHOD), THE] THE ADDITIONAL LIABILITY FOR THE
     6  INCREASE IN BENEFITS PROVIDED IN THIS SECTION SHALL BE FUNDED IN
     7  EQUAL DOLLAR ANNUAL INSTALLMENTS [INCREASING BY 5% EACH YEAR]
     8  OVER A PERIOD OF [20] TEN YEARS BEGINNING JULY 1, [1995] 2002.
     9     * * *
    10  § 8348.5.  SUPPLEMENTAL ANNUITIES COMMENCING 1998.
    11     * * *
    12     (F)  FUNDING.--[NOTWITHSTANDING SECTION 8328 (RELATING TO
    13  ACTUARIAL COST METHOD), THE] THE ADDITIONAL LIABILITY FOR THE
    14  INCREASE IN BENEFITS PROVIDED IN THIS SECTION SHALL BE FUNDED IN
    15  EQUAL DOLLAR ANNUAL INSTALLMENTS [INCREASING BY 5% EACH YEAR]
    16  OVER A PERIOD OF [20] TEN YEARS BEGINNING JULY 1, [1998] 2002.
    17  NOTWITHSTANDING THE PROVISIONS OF SECTION 212 OF THE ACT OF
    18  APRIL 22, 1998 [(P.L.  , NO.6A)] (P.L.1341, NO.6A), KNOWN AS THE
    19  GENERAL APPROPRIATION ACT OF 1998, REGARDING PAYMENT FOR COST-
    20  OF-LIVING INCREASES FOR ANNUITANTS, PAYMENTS FOR COST-OF-LIVING
    21  INCREASES FOR ANNUITANTS SHALL BE MADE UNDER SECTION 8535
    22  (RELATING TO PAYMENTS TO SCHOOL ENTITIES BY COMMONWEALTH).
    23     * * *
    24  § 8501.  PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD.
    25     (A)  STATUS AND MEMBERSHIP.--THE BOARD SHALL BE AN
    26  INDEPENDENT ADMINISTRATIVE BOARD AND SHALL CONSIST OF 15
    27  MEMBERS: THE SECRETARY OF EDUCATION, EX OFFICIO; THE STATE
    28  TREASURER, EX OFFICIO; TWO SENATORS; TWO MEMBERS OF THE HOUSE OF
    29  REPRESENTATIVES; THE EXECUTIVE SECRETARY OF THE PENNSYLVANIA
    30  SCHOOL BOARDS ASSOCIATION, EX OFFICIO; TWO TO BE APPOINTED BY
    20010H0026B1905                 - 46 -

     1  THE GOVERNOR, AT LEAST ONE OF WHOM SHALL NOT BE A SCHOOL
     2  EMPLOYEE OR AN OFFICER OR EMPLOYEE OF THE STATE; THREE TO BE
     3  ELECTED BY THE ACTIVE PROFESSIONAL MEMBERS OF THE SYSTEM FROM
     4  AMONG THEIR NUMBER; ONE TO BE ELECTED BY ANNUITANTS FROM AMONG
     5  THEIR NUMBER; ONE TO BE ELECTED BY THE ACTIVE NONPROFESSIONAL
     6  MEMBERS OF THE SYSTEM FROM AMONG THEIR NUMBER; AND ONE TO BE
     7  ELECTED BY MEMBERS OF PENNSYLVANIA PUBLIC SCHOOL BOARDS FROM
     8  AMONG THEIR NUMBER. THE APPOINTMENTS MADE BY THE GOVERNOR SHALL
     9  BE CONFIRMED BY THE SENATE AND EACH ELECTION SHALL BE CONDUCTED
    10  IN A MANNER APPROVED BY THE BOARD. THE TERMS OF THE APPOINTED
    11  AND NONLEGISLATIVE ELECTED MEMBERS SHALL BE THREE YEARS. THE
    12  MEMBERS FROM THE SENATE SHALL BE APPOINTED BY THE PRESIDENT PRO
    13  TEMPORE OF THE SENATE AND SHALL CONSIST OF ONE MEMBER FROM THE
    14  MAJORITY AND ONE MEMBER FROM THE MINORITY. THE MEMBERS FROM THE
    15  HOUSE OF REPRESENTATIVES SHALL BE APPOINTED BY THE SPEAKER OF
    16  THE HOUSE OF REPRESENTATIVES AND SHALL CONSIST OF ONE MEMBER
    17  FROM THE MAJORITY AND ONE MEMBER FROM THE MINORITY. THE
    18  LEGISLATIVE MEMBERS SHALL SERVE ON THE BOARD FOR THE DURATION OF
    19  [THE TERMS FOR WHICH THEY WERE ELECTED.] THEIR LEGISLATIVE TERMS
    20  AND SHALL CONTINUE TO SERVE UNTIL 30 DAYS AFTER THE CONVENING OF
    21  THE NEXT REGULAR SESSION OF THE GENERAL ASSEMBLY AFTER THE
    22  EXPIRATION OF THEIR RESPECTIVE LEGISLATIVE TERMS, OR UNTIL A
    23  SUCCESSOR IS APPOINTED FOR THE NEW TERM, WHICHEVER OCCURS FIRST.
    24  THE CHAIRMAN OF THE BOARD SHALL BE ELECTED BY THE BOARD MEMBERS.
    25  EACH EX OFFICIO MEMBER OF THE BOARD AND EACH LEGISLATIVE MEMBER
    26  OF THE BOARD MAY APPOINT A DULY AUTHORIZED DESIGNEE TO ACT IN
    27  HIS STEAD.
    28     (B)  [APPOINTMENT AND TERMS OF INITIAL MEMBERS.--FOR THE
    29  PURPOSES OF SECURING AN ORDERLY TRANSITION AND STAGGERED TERMS,
    30  THE ELECTED MEMBERS OF THE BOARD SERVING ON THE EFFECTIVE DATE
    20010H0026B1905                 - 47 -

     1  OF THIS PART SHALL SERVE UNTIL THE EXPIRATION OF THEIR
     2  RESPECTIVE TERMS. THE BOARD MEMBER INITIALLY ELECTED BY MEMBERS
     3  OF PENNSYLVANIA PUBLIC SCHOOL BOARDS SHALL SERVE UNTIL JANUARY
     4  1, 1976. THE BOARD MEMBER INITIALLY ELECTED BY THE ACTIVE
     5  NONPROFESSIONAL MEMBERS OF THE SYSTEM SHALL SERVE UNTIL JANUARY
     6  1, 1977. ONE OF THE INITIAL BOARD MEMBERS APPOINTED BY THE
     7  GOVERNOR AFTER THE EFFECTIVE DATE OF THIS PART SHALL SERVE UNTIL
     8  JANUARY 1, 1976 AND THE SECOND APPOINTED BOARD MEMBER SHALL
     9  SERVE UNTIL JANUARY 1, 1977.] VACANCIES.--A VACANCY OCCURRING
    10  DURING THE TERM OF ANY MEMBER SHALL BE FILLED FOR THE UNEXPIRED
    11  TERM BY A SUCCESSOR APPOINTED OR ELECTED AS THE CASE MAY BE IN
    12  THE SAME MANNER AS HIS PREDECESSOR.
    13     * * *
    14  § 8502.  ADMINISTRATIVE DUTIES OF BOARD.
    15     * * *
    16     (M)  MEMBER CONTRIBUTIONS AND INTEREST.--THE BOARD SHALL
    17  CAUSE EACH MEMBER'S CONTRIBUTIONS, INCLUDING PAYROLL DEDUCTIONS,
    18  PICKUP CONTRIBUTIONS AND ALL OTHER PAYMENTS, INCLUDING, BUT NOT
    19  LIMITED TO, AMOUNTS COLLECTED BY THE STATE EMPLOYEES' RETIREMENT
    20  SYSTEM FOR THE REINSTATEMENT OF PREVIOUS SCHOOL SERVICE OR
    21  CREDITABLE NONSCHOOL SERVICE, AND AMOUNTS PAID TO RETURN
    22  BENEFITS PAID AFTER THE DATE OF RETURN TO SCHOOL SERVICE OR
    23  ENTERING STATE SERVICE REPRESENTING LUMP SUM PAYMENTS MADE
    24  PURSUANT TO SECTION 8345(A)(4)(III) (RELATING TO MEMBER'S
    25  OPTIONS) AND MEMBER'S ANNUITY PAYMENTS, BUT NOT INCLUDING OTHER
    26  BENEFITS RETURNED PURSUANT TO SECTION 8346(A.1) (RELATING TO
    27  TERMINATION OF ANNUITIES) TO BE CREDITED TO THE ACCOUNT OF SUCH
    28  MEMBER AND SHALL PAY ALL SUCH AMOUNTS INTO THE FUND. SUCH
    29  CONTRIBUTIONS SHALL BE CREDITED WITH STATUTORY INTEREST UNTIL
    30  DATE OF TERMINATION OF SERVICE, EXCEPT IN THE CASE OF A VESTEE,
    20010H0026B1905                 - 48 -

     1  WHO SHALL HAVE SUCH INTEREST CREDITED UNTIL THE EFFECTIVE DATE
     2  OF RETIREMENT OR UNTIL THE RETURN OF HIS ACCUMULATED DEDUCTIONS,
     3  IF HE SO ELECTS; AND IN THE CASE OF A MULTIPLE SERVICE MEMBER
     4  WHO SHALL HAVE SUCH INTEREST CREDITED UNTIL TERMINATION OF
     5  SERVICE IN BOTH THE SCHOOL AND THE STATE SYSTEMS.
     6     * * *
     7  [§ 8502.1.  HEALTH INSURANCE.
     8     (A)  AUTHORITY.--THE BOARD MAY SPONSOR A PARTICIPANT-FUNDED
     9  GROUP HEALTH INSURANCE PROGRAM FOR ANNUITANTS, SPOUSES OF
    10  ANNUITANTS, SURVIVOR ANNUITANTS AND THEIR DEPENDENTS. THE BOARD
    11  MAY PROMULGATE REGULATIONS REGARDING THE PRUDENT AND EFFICIENT
    12  OPERATION OF THE PROGRAM, INCLUDING, BUT NOT LIMITED TO:
    13         (1)  ESTABLISHMENT OF AN ANNUAL BUDGET AND DISBURSEMENTS
    14     IN ACCORDANCE WITH THE BUDGET.
    15         (2)  DETERMINATION OF THE BENEFITS STRUCTURE.
    16         (3)  DETERMINATION OF ENROLLMENT PROCEDURES.
    17         (4)  ESTABLISHMENT OF PREMIUM RATES SUFFICIENT TO FULLY
    18     FUND THE PROGRAM, INCLUDING ADMINISTRATIVE EXPENSES.
    19         (5)  CONTRACTING FOR GOODS, EQUIPMENT, SERVICES,
    20     CONSULTANTS AND OTHER PROFESSIONAL PERSONNEL AS NEEDED TO
    21     OPERATE THE PROGRAM.
    22     (B)  SEPARATE ACCOUNT.--ALL FUNDS RELATED TO THE HEALTH
    23  INSURANCE PROGRAM SHALL BE MAINTAINED AND ACCOUNTED FOR
    24  SEPARATELY FROM THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT FUND.
    25     (C)  OPERATION.--THE BOARD MAY ESTABLISH AND OPERATE THE
    26  PROGRAM THROUGH A LAWFULLY AUTHORIZED ENTITY.
    27     (D)  ADDITIONAL REQUIREMENTS.--THE ASSETS OF THE FUND SHALL
    28  NOT BE LIABLE OR UTILIZED FOR PAYMENT OF ANY EXPENSES OR CLAIMS
    29  INCURRED BY THE HEALTH INSURANCE PROGRAM. THE PROGRAM SHALL BE
    30  AN APPROVED HEALTH INSURANCE PROGRAM FOR PURPOSES OF SECTION
    20010H0026B1905                 - 49 -

     1  8505(I) (RELATING TO DUTIES OF BOARD REGARDING APPLICATIONS AND
     2  ELECTIONS OF MEMBERS) AND AN APPROVED INSURANCE CARRIER FOR
     3  PURPOSES OF SECTION 8509 (RELATING TO HEALTH INSURANCE PREMIUM
     4  ASSISTANCE PROGRAM). THE PROGRAM SHALL NOT BE SUBJECT TO THE
     5  PROVISIONS OF SECTION 8531 (RELATING TO STATE GUARANTEE).]
     6     SECTION 4.1.  TITLE 24 IS AMENDED BY ADDING A SECTION TO
     7  READ:
     8  § 8502.2.  HEALTH INSURANCE.
     9     (A)  AUTHORITY.--THE BOARD MAY SPONSOR A PARTICIPANT-FUNDED
    10  GROUP HEALTH INSURANCE PROGRAM FOR ANNUITANTS, SPOUSES OF
    11  ANNUITANTS, SURVIVOR ANNUITANTS AND THEIR DEPENDENTS. THE BOARD
    12  MAY PROMULGATE REGULATIONS REGARDING THE PRUDENT AND EFFICIENT
    13  OPERATION OF THE PROGRAM, INCLUDING, BUT NOT LIMITED TO:
    14         (1)  ESTABLISHMENT OF AN ANNUAL BUDGET AND DISBURSEMENTS
    15     IN ACCORDANCE WITH THE BUDGET.
    16         (2)  DETERMINATION OF THE BENEFITS STRUCTURE.
    17         (3)  DETERMINATION OF ENROLLMENT PROCEDURES.
    18         (4)  ESTABLISHMENT OF PREMIUM RATES SUFFICIENT TO FULLY
    19     FUND THE PROGRAM, INCLUDING ADMINISTRATIVE EXPENSES.
    20         (5)  CONTRACTING FOR GOODS, EQUIPMENT, SERVICES,
    21     CONSULTANTS AND OTHER PROFESSIONAL PERSONNEL AS NEEDED TO
    22     OPERATE THE PROGRAM.
    23     (B)  SEPARATE ACCOUNT.--ALL FUNDS RELATED TO THE HEALTH
    24  INSURANCE PROGRAM SHALL BE MAINTAINED AND ACCOUNTED FOR
    25  SEPARATELY FROM THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT FUND.
    26     (C)  OPERATION.--THE BOARD MAY ESTABLISH AND OPERATE THE
    27  PROGRAM THROUGH A LAWFULLY AUTHORIZED ENTITY.
    28     (D)  ADDITIONAL REQUIREMENTS.--THE ASSETS OF THE FUND SHALL
    29  NOT BE LIABLE OR UTILIZED FOR PAYMENT OF ANY EXPENSES OR CLAIMS
    30  INCURRED BY THE HEALTH INSURANCE PROGRAM. THE PROGRAM SHALL BE
    20010H0026B1905                 - 50 -

     1  AN APPROVED HEALTH INSURANCE PROGRAM FOR PURPOSES OF SECTION
     2  8505(I) (RELATING TO DUTIES OF BOARD REGARDING APPLICATIONS AND
     3  ELECTIONS OF MEMBERS) AND AN APPROVED INSURANCE CARRIER FOR
     4  PURPOSES OF SECTION 8509 (RELATING TO HEALTH INSURANCE PREMIUM
     5  ASSISTANCE PROGRAM). THE PROGRAM SHALL NOT BE SUBJECT TO THE
     6  PROVISIONS OF SECTION 8531 (RELATING TO STATE GUARANTEE).
     7     SECTION 4.2.  SECTIONS 8503(A) AND 8504(B) OF TITLE 24 ARE
     8  AMENDED TO READ:
     9  § 8503.  DUTIES OF BOARD TO ADVISE AND REPORT TO EMPLOYERS AND
    10             MEMBERS.
    11     (A)  MANUAL OF REGULATIONS.--THE BOARD SHALL, WITH THE ADVICE
    12  OF THE ATTORNEY GENERAL AND THE ACTUARY, PREPARE WITHIN 90 DAYS
    13  OF THE EFFECTIVE DATE OF THIS PART, A MANUAL INCORPORATING RULES
    14  AND REGULATIONS CONSISTENT WITH THE PROVISIONS OF THIS PART FOR
    15  THE EMPLOYERS WHO SHALL MAKE INFORMATION CONTAINED THEREIN
    16  AVAILABLE TO THE GENERAL MEMBERSHIP. THE BOARD SHALL THEREAFTER
    17  ADVISE THE EMPLOYERS WITHIN 90 DAYS OF ANY CHANGES IN SUCH RULES
    18  AND REGULATIONS DUE TO CHANGES IN THE LAW OR DUE TO CHANGES IN
    19  ADMINISTRATIVE POLICIES. AS SOON AS PRACTICABLE AFTER THE
    20  COMMISSIONER'S PUBLICATION WITH RESPECT THERETO, THE BOARD SHALL
    21  ALSO ADVISE THE EMPLOYERS AS TO ANY COST-OF-LIVING ADJUSTMENT
    22  FOR THE SUCCEEDING CALENDAR YEAR IN THE AMOUNT OF THE LIMITATION
    23  UNDER IRC § 401(A)(17) AND THE DOLLAR AMOUNTS OF THE LIMITATIONS
    24  UNDER IRC § 415(B).
    25     * * *
    26  § 8504.  DUTIES OF BOARD TO REPORT TO STATE EMPLOYEES'
    27             RETIREMENT BOARD.
    28     * * *
    29     (B)  MULTIPLE SERVICE MEMBERSHIP OF STATE EMPLOYEES.--UPON
    30  RECEIPT OF NOTIFICATION FROM THE STATE EMPLOYEES' RETIREMENT
    20010H0026B1905                 - 51 -

     1  BOARD THAT A FORMER SCHOOL EMPLOYEE HAS BECOME AN ACTIVE MEMBER
     2  IN THE STATE EMPLOYEES' RETIREMENT SYSTEM AND HAS ELECTED TO
     3  RECEIVE CREDIT FOR MULTIPLE SERVICE, THE BOARD SHALL CERTIFY TO
     4  THE STATE EMPLOYEES' RETIREMENT BOARD AND CONCURRENTLY TO THE
     5  MEMBER:
     6         (1)  THE TOTAL CREDITED SERVICE IN THE SYSTEM AND THE
     7     NUMBER OF YEARS AND FRACTIONAL PART OF A YEAR OF SERVICE
     8     CREDITED IN EACH CLASS OF SERVICE.
     9         (2)  THE ANNUAL COMPENSATION RECEIVED EACH SCHOOL YEAR BY
    10     THE MEMBER FOR CREDITED SCHOOL SERVICE.
    11         (3)  THE AMOUNT OF THE DEDUCTIONS AND THE PERIOD OVER
    12     WHICH THEY ARE TO BE MADE. IF THE MEMBER HAS ELECTED PAYROLL
    13     DEDUCTIONS PURSUANT TO SECTION 8323 (RELATING TO MEMBER
    14     CONTRIBUTIONS FOR CREDITABLE SCHOOL SERVICE) OR 8324
    15     (RELATING TO CONTRIBUTIONS FOR PURCHASE OF CREDIT FOR
    16     CREDITABLE NONSCHOOL SERVICE).
    17     * * *
    18     SECTION 5.  SECTION 8505(B) OF TITLE 24 IS AMENDED AND THE
    19  SECTION IS AMENDED BY ADDING A SUBSECTION TO READ:
    20  § 8505.  DUTIES OF BOARD REGARDING APPLICATIONS AND ELECTIONS OF
    21             MEMBERS.
    22     * * *
    23     (B)  STATE EMPLOYEES ELECTING MULTIPLE SERVICE STATUS.--UPON
    24  RECEIPT OF NOTIFICATION FROM THE STATE EMPLOYEES' RETIREMENT
    25  BOARD THAT A FORMER SCHOOL EMPLOYEE HAS BECOME AN ACTIVE MEMBER
    26  IN THE STATE EMPLOYEES' RETIREMENT SYSTEM AND HAS ELECTED TO
    27  BECOME A MEMBER WITH MULTIPLE SERVICE STATUS, THE BOARD SHALL:
    28         (1)  IN CASE OF A MEMBER WHO IS RECEIVING AN ANNUITY FROM
    29     THE SYSTEM[, DISCONTINUE]:
    30             (I)  DISCONTINUE PAYMENTS, TRANSFER THE PRESENT
    20010H0026B1905                 - 52 -

     1         VALUE[, AT THAT TIME,] OF THE MEMBER'S ANNUITY AT THE
     2         TIME OF ENTERING STATE SERVICE, PLUS THE AMOUNT WITHDRAWN
     3         IN A LUMP SUM PAYMENT, ON OR AFTER THE DATE OF ENTERING
     4         STATE SERVICE, PURSUANT TO SECTION 8345 (RELATING TO
     5         MEMBER'S OPTIONS), WITH STATUTORY INTEREST TO DATE OF
     6         TRANSFER, MINUS THE AMOUNT TO BE RETURNED TO THE BOARD ON
     7         ACCOUNT OF RETURN TO SERVICE THAT THE BOARD HAS
     8         DETERMINED IS TO BE CREDITED IN THE MEMBERS' SAVINGS
     9         ACCOUNT, FROM THE ANNUITY RESERVE ACCOUNT TO THE MEMBERS'
    10         SAVINGS ACCOUNT AND RESUME CREDITING OF STATUTORY
    11         INTEREST ON THE AMOUNT RESTORED TO HIS CREDIT [AND
    12         TRANSFER].
    13             (II)  TRANSFER THE BALANCE OF THE PRESENT VALUE OF
    14         THE TOTAL ANNUITY, MINUS THE AMOUNT TO BE RETURNED TO THE
    15         BOARD ON ACCOUNT OF RETURN TO SERVICE THAT THE BOARD HAS
    16         DETERMINED IS TO BE CREDITED IN THE STATE ACCUMULATION
    17         ACCOUNT, FROM THE ANNUITY RESERVE ACCOUNT TO THE STATE
    18         ACCUMULATION ACCOUNT.
    19             (III)  CERTIFY TO THE MEMBER THE AMOUNT OF LUMP SUM
    20         AND ANNUITY PAYMENTS WITH STATUTORY INTEREST THE MEMBER
    21         IS TO RETURN TO THE BOARD, AND OF THOSE AMOUNTS, WHICH
    22         AMOUNT SHALL BE CREDITED TO THE MEMBERS' SAVINGS ACCOUNT
    23         AND CREDITED WITH STATUTORY INTEREST AS SUCH PAYMENTS ARE
    24         RETURNED AND WHICH AMOUNT SHALL BE CREDITED TO THE STATE
    25         ACCUMULATION ACCOUNT.
    26         (2)  IN CASE OF A MEMBER WHO IS NOT RECEIVING AN ANNUITY
    27     FROM THE SYSTEM AND WHO HAS NOT WITHDRAWN HIS ACCUMULATED
    28     DEDUCTIONS, CONTINUE OR RESUME THE CREDITING OF STATUTORY
    29     INTEREST ON HIS ACCUMULATED DEDUCTIONS.
    30         (3)  IN CASE OF A MEMBER WHO IS NOT RECEIVING AN ANNUITY
    20010H0026B1905                 - 53 -

     1     FROM THE SYSTEM AND HIS ACCUMULATED DEDUCTIONS WERE
     2     WITHDRAWN, CERTIFY TO THE MEMBER THE ACCUMULATED DEDUCTIONS
     3     AS THEY WOULD HAVE BEEN AT THE TIME OF HIS SEPARATION HAD HE
     4     BEEN A FULL COVERAGE MEMBER TOGETHER WITH STATUTORY INTEREST
     5     FOR ALL PERIODS OF SUBSEQUENT STATE AND SCHOOL SERVICE TO THE
     6     DATE OF REPAYMENT. SUCH AMOUNT SHALL BE RESTORED BY HIM AND
     7     SHALL BE CREDITED WITH STATUTORY INTEREST AS SUCH PAYMENTS
     8     ARE RESTORED.
     9     * * *
    10     (K)  SCHOOL EMPLOYEES ELECTING MULTIPLE SERVICE STATUS.--UPON
    11  RECEIPT OF NOTIFICATION FROM THE STATE EMPLOYEES' RETIREMENT
    12  BOARD THAT A MEMBER WHO HAS ELECTED MULTIPLE SERVICE MEMBERSHIP
    13  HAS ELECTED TO RESTORE STATE SERVICE OR PURCHASE CREDITABLE
    14  NONSTATE SERVICE IN THE STATE EMPLOYEES' RETIREMENT SYSTEM OR IS
    15  OBLIGATED TO RETURN BENEFITS TO THE STATE EMPLOYEES' RETIREMENT
    16  BOARD ON ACCOUNT OF ELECTING MULTIPLE SERVICE MEMBERSHIP HAS
    17  ELECTED TO PAY ALL OR PART OF THE AMOUNT DUE TO THE STATE
    18  EMPLOYEES' RETIREMENT BOARD BY SALARY DEDUCTIONS, THE BOARD
    19  SHALL COLLECT FROM THE EMPLOYEE THE AMOUNTS CERTIFIED BY THE
    20  STATE EMPLOYEES' RETIREMENT BOARD AS DUE AND OWING BY THE MEMBER
    21  AND SHALL CERTIFY AND TRANSFER TO THE STATE EMPLOYEES'
    22  RETIREMENT BOARD THE AMOUNTS SO COLLECTED.
    23     SECTION 6.  SECTIONS 8506(C), (G) AND (H), 8507(C) AND (G),
    24  8509(B), 8521(H), (I) AND (J) AND 8525(A) OF TITLE 24 ARE
    25  AMENDED TO READ:
    26  § 8506.  DUTIES OF EMPLOYERS.
    27     * * *
    28     (C)  MEMBER AND EMPLOYER CONTRIBUTIONS.--THE EMPLOYER SHALL
    29  CERTIFY TO ITS TREASURER THE REQUIRED MEMBER CONTRIBUTIONS
    30  PICKED UP AND ANY OTHER CONTRIBUTIONS, INCLUDING, BUT NOT
    20010H0026B1905                 - 54 -

     1  LIMITED TO, AMOUNTS COLLECTED FOR THE STATE EMPLOYEES'
     2  RETIREMENT BOARD FOR THE REINSTATEMENT OF PREVIOUS STATE SERVICE
     3  OR CREDITABLE NONSTATE SERVICE AND AMOUNTS PAID TO RETURN
     4  BENEFITS PAID AFTER THE DATE OF RETURN TO STATE SERVICE OR
     5  ENTERING SCHOOL SERVICE, DEDUCTED FROM EACH PAYROLL. ON JULY 1,
     6  1996, AND UPON ANY LATER EFFECTIVE DATE OF EMPLOYMENT OF ANY
     7  NONELIGIBLE MEMBER TO WHOM [LIMITATION] LIMITATIONS UNDER IRC §
     8  401(A)(17) OR 415(B) APPLIES OR IS EXPECTED TO APPLY, THE
     9  EMPLOYER SHALL IDENTIFY TO ITS TREASURER OR OTHER PAYROLL
    10  ADMINISTRATOR THE MEMBER OR MEMBERS TO WHOM SUCH LIMIT APPLIES
    11  OR MAY APPLY AND SHALL CAUSE ANY SUCH MEMBER'S CONTRIBUTIONS
    12  DEDUCTED FROM PAYROLL AND THE EMPLOYER'S CONTRIBUTION ON HIS
    13  BEHALF TO CEASE AT THE [LIMITATION] LIMITATIONS UNDER IRC §
    14  401(A)(17) OR 415(B) ON THE PAYROLL DATE IF AND WHEN SUCH LIMIT
    15  SHALL BE REACHED. THE TREASURER SHALL REMIT TO THE SECRETARY OF
    16  THE BOARD EACH MONTH THE TOTAL OF THE MEMBER CONTRIBUTIONS AND
    17  THE AMOUNT DUE FROM THE EMPLOYER DETERMINED IN ACCORDANCE WITH
    18  SECTION 8327 (RELATING TO PAYMENTS BY EMPLOYERS). IF, UPON
    19  CREDITING THE REMITTANCE OF A NONELIGIBLE MEMBER'S CONTRIBUTIONS
    20  TO THE MEMBER'S SAVINGS ACCOUNT, THE BOARD SHALL DETERMINE THAT
    21  SUCH ACCOUNT SHALL HAVE BEEN CREDITED WITH PICKUP CONTRIBUTIONS
    22  ATTRIBUTABLE TO COMPENSATION WHICH IS IN EXCESS OF THE ANNUAL
    23  COMPENSATION LIMIT UNDER IRC § 401(A)(17) OR 415(B), OR WITH
    24  TOTAL MEMBER CONTRIBUTIONS FOR SUCH MEMBER WHICH WOULD CAUSE
    25  SUCH MEMBER'S CONTRIBUTIONS OR BENEFITS TO EXCEED ANY APPLICABLE
    26  LIMITATION ON CONTRIBUTIONS OR BENEFITS UNDER IRC § 401(A)(17)
    27  OR 415(B), THE BOARD SHALL AS SOON AS PRACTICABLE REFUND TO THE
    28  MEMBER FROM HIS INDIVIDUAL MEMBER ACCOUNT SUCH AMOUNT, TOGETHER
    29  WITH THE STATUTORY INTEREST THEREON, AS WILL CAUSE THE MEMBER'S
    30  TOTAL MEMBER CONTRIBUTIONS NOT TO EXCEED THE APPLICABLE LIMIT.
    20010H0026B1905                 - 55 -

     1  THE PAYMENT OF ANY SUCH REFUND TO THE MEMBER SHALL BE CHARGED TO
     2  THE MEMBER'S SAVINGS ACCOUNT.
     3     * * *
     4     (G)  FORMER STATE EMPLOYEE CONTRIBUTORS.--THE EMPLOYER SHALL,
     5  UPON THE EMPLOYMENT OF A FORMER MEMBER OF THE STATE EMPLOYEES'
     6  RETIREMENT SYSTEM WHO IS NOT AN ANNUITANT OF THE STATE
     7  EMPLOYEES' RETIREMENT SYSTEM, ADVISE SUCH EMPLOYEE OF HIS RIGHT
     8  TO ELECT MULTIPLE SERVICE MEMBERSHIP WITHIN [30] 365 DAYS OF
     9  ENTRY INTO THE SYSTEM AND, IN THE CASE ANY SUCH EMPLOYEE WHO SO
    10  ELECTS HAS WITHDRAWN HIS ACCUMULATED DEDUCTIONS, REQUIRE HIM TO
    11  RESTORE HIS ACCUMULATED DEDUCTIONS AS THEY WOULD HAVE BEEN AT
    12  THE TIME OF HIS SEPARATION HAD HE BEEN A FULL COVERAGE MEMBER,
    13  TOGETHER WITH STATUTORY INTEREST FOR ALL PERIODS OF SUBSEQUENT
    14  STATE AND SCHOOL SERVICE TO DATE OF REPAYMENT. THE EMPLOYER
    15  SHALL ADVISE THE BOARD OF SUCH ELECTION.
    16     (H)  FORMER STATE EMPLOYEE ANNUITANTS.--THE EMPLOYER SHALL,
    17  UPON THE EMPLOYMENT OF AN ANNUITANT OF THE STATE EMPLOYEES'
    18  RETIREMENT SYSTEM WHO APPLIES FOR MEMBERSHIP IN THE SYSTEM,
    19  ADVISE SUCH EMPLOYEE THAT HE MAY ELECT MULTIPLE SERVICE
    20  MEMBERSHIP WITHIN [30] 365 DAYS OF ENTRY INTO THE SYSTEM AND
    21  THAT IF HE SO ELECTS HIS ANNUITY FROM THE STATE EMPLOYEES'
    22  RETIREMENT SYSTEM WILL BE DISCONTINUED EFFECTIVE UPON THE DATE
    23  OF HIS RETURN TO SCHOOL SERVICE AND, UPON TERMINATION OF SCHOOL
    24  SERVICE AND APPLICATION FOR AN ANNUITY, THE ANNUITY WILL BE
    25  ADJUSTED IN ACCORDANCE WITH SECTION 8346 (RELATING TO
    26  TERMINATION OF ANNUITIES). THE EMPLOYER SHALL ADVISE THE BOARD
    27  OF SUCH ELECTION.
    28     * * *
    29  § 8507.  RIGHTS AND DUTIES OF SCHOOL EMPLOYEES AND MEMBERS.
    30     * * *
    20010H0026B1905                 - 56 -

     1     (C)  MULTIPLE SERVICE MEMBERSHIP.--ANY ACTIVE MEMBER WHO WAS
     2  FORMERLY AN ACTIVE MEMBER IN THE STATE EMPLOYEES' RETIREMENT
     3  SYSTEM MAY ELECT TO BECOME A MULTIPLE SERVICE MEMBER. SUCH
     4  ELECTION SHALL OCCUR NO LATER THAN [30] 365 DAYS AFTER BECOMING
     5  AN ACTIVE MEMBER IN THIS SYSTEM.
     6     * * *
     7     (G)  VESTING OF RETIREMENT RIGHTS.--IF A MEMBER ELECTS TO
     8  VEST HIS RETIREMENT RIGHTS, HE SHALL NOMINATE A BENEFICIARY BY
     9  WRITTEN DESIGNATION FILED WITH THE BOARD AND HE MAY ANYTIME
    10  THEREAFTER WITHDRAW THE ACCUMULATED DEDUCTIONS STANDING TO HIS
    11  CREDIT OR, IF HE HAS [TEN] FIVE OR MORE ELIGIBILITY POINTS,
    12  APPLY FOR AN ANNUITY.
    13     * * *
    14  § 8509.  HEALTH INSURANCE PREMIUM ASSISTANCE PROGRAM.
    15     * * *
    16     (B)  AMOUNT OF PREMIUM ASSISTANCE.--[EFFECTIVE JULY 1, 1992,
    17  PARTICIPATING] PARTICIPATING ELIGIBLE ANNUITANTS SHALL RECEIVE
    18  PREMIUM ASSISTANCE PAYMENTS [OF $55 PER MONTH OR THE ACTUAL
    19  MONTHLY PREMIUM, WHICHEVER IS LESS] AS PROVIDED IN PARAGRAPHS
    20  (1) AND (2). SUCH PAYMENTS SHALL BE MADE BY THE BOARD TO THE
    21  PARTICIPATING ELIGIBLE ANNUITANTS FOR THEIR PAYMENT DIRECTLY TO
    22  THEIR APPROVED INSURANCE CARRIERS. SUCH PAYMENTS MAY ALSO BE
    23  PAID BY THE BOARD, AT THE BOARD'S DISCRETION, DIRECTLY TO THE
    24  PARTICIPATING ELIGIBLE ANNUITANTS' APPROVED INSURANCE CARRIERS.
    25  THE BOARD SHALL HAVE THE RIGHT TO VERIFY THE APPLICATION AND
    26  RECEIPT OF THE PAYMENTS BY THE PARTICIPATING ELIGIBLE ANNUITANTS
    27  AND THEIR APPROVED INSURANCE CARRIERS. THE PREMIUM ASSISTANCE
    28  PAYMENTS ARE AS FOLLOWS:
    29         (1)  EFFECTIVE JULY 1, 1992, $55 PER MONTH OR THE ACTUAL
    30     MONTHLY PREMIUM, WHICHEVER IS LESS.
    20010H0026B1905                 - 57 -

     1         (2)  EFFECTIVE JANUARY 1, 2002, $100 PER MONTH OR THE
     2     ACTUAL MONTHLY PREMIUM, WHICHEVER IS LESS.
     3     * * *
     4  § 8521.  MANAGEMENT OF FUND AND ACCOUNTS.
     5     * * *
     6     (H)  VENTURE CAPITAL[.--VENTURE CAPITAL INVESTMENTS SHALL BE
     7  LIMITED TO NOT MORE THAN 2% OF THE BOOK VALUE OF THE TOTAL
     8  ASSETS OF THE FUND AS DETERMINED FOR FINANCIAL STATEMENT
     9  PURPOSES AS OF JUNE 30 NEXT PRECEDING THE DATE OF INVESTMENT. AN
    10  INVESTMENT SHALL BE DEEMED A VENTURE CAPITAL INVESTMENT IF IT
    11  RESULTS IN THE ACQUISITION OF EQUITY INTERESTS OR A COMBINATION
    12  OF DEBT AND EQUITY INTERESTS IN A BUSINESS WHICH IS EXPECTED TO
    13  GROW SUBSTANTIALLY IN THE FUTURE AND IN WHICH THE EXPECTED
    14  RETURN ON INVESTMENT IS TO COME PREDOMINANTLY FROM AN INCREASE
    15  IN VALUE OF THE EQUITY INTERESTS AND ARE NOT INTERESTS IN OR
    16  SECURED BY REAL ESTATE. A VENTURE CAPITAL INVESTMENT MAY BE MADE
    17  ONLY IF, IN THE JUDGMENT OF THE BOARD, THE INVESTMENT IS
    18  REASONABLY LIKELY TO ENHANCE THE GENERAL WELFARE OF THIS
    19  COMMONWEALTH AND ITS CITIZENS AND MEETS THE STANDARD OF PRUDENCE
    20  SET FORTH IN SUBSECTION (A). IN DETERMINING WHETHER THE
    21  INVESTMENT MEETS THE STANDARD OF PRUDENCE, THE BOARD MAY
    22  CONSIDER, TOGETHER WITH THE EXPECTED RETURN ON AND THE RISK
    23  CHARACTERISTICS OF THE PARTICULAR INVESTMENT, THE ACTUAL AND
    24  EXPECTED FUTURE RETURNS AND THE RISK CHARACTERISTICS OF THE
    25  TOTAL VENTURE CAPITAL INVESTMENTS HELD BY THE BOARD AT THE TIME
    26  AND THE DEGREE TO WHICH THE PROPOSED NEW INVESTMENT WOULD
    27  PROMOTE FURTHER DIVERSIFICATION WITHIN THE VENTURE CAPITAL ASSET
    28  CLASS.], PRIVATE PLACEMENT AND ALTERNATIVE INVESTMENTS.--THE
    29  BOARD IN ITS PRUDENT DISCRETION MAY MAKE ANY VENTURE CAPITAL
    30  INVESTMENT, PRIVATE PLACEMENT INVESTMENT OR OTHER ALTERNATIVE
    20010H0026B1905                 - 58 -

     1  INVESTMENT OF ANY KIND, STRUCTURE OR MANNER WHICH MEETS THE
     2  STANDARD OF PRUDENCE SET FORTH IN SUBSECTION (A).
     3     (I)  VEHICLES FOR AUTHORIZED INVESTMENTS.--THE BOARD IN ITS
     4  PRUDENT DISCRETION MAY MAKE ANY INVESTMENTS WHICH MEET THE
     5  STANDARD OF PRUDENCE SET FORTH IN SUBSECTION (A) BY [BECOMING A
     6  LIMITED PARTNER IN PARTNERSHIPS THAT WILL HOLD SUCH INVESTMENTS,
     7  OR BY ACQUIRING SHARES OR UNITS OF PARTICIPATION OR OTHERWISE
     8  PARTICIPATING BENEFICIALLY IN BANK COLLECTIVE TRUSTS OR IN THE
     9  SEPARATE ACCOUNTS OF ANY INSURANCE COMPANY AUTHORIZED TO DO
    10  BUSINESS IN THIS COMMONWEALTH, OR BY ACQUIRING STOCKS OR SHARES
    11  OR UNITS OF PARTICIPATION OR OTHERWISE PARTICIPATING
    12  BENEFICIALLY IN THE FUND OF ANY CORPORATION OR TRUST ORGANIZED
    13  OR CREATED AND EXISTING UNDER THE LAWS OF THE UNITED STATES OR
    14  OF ANY STATE, DISTRICT OR TERRITORY THEREOF WHICH FUND IS
    15  MAINTAINED FOR AND CONSISTS OF ASSETS OF EMPLOYEES' BENEFIT
    16  TRUSTS, INCLUDING GOVERNMENTAL PLANS AS DEFINED IN IRC § 414(D)
    17  OR WHICH MEET THE REQUIREMENTS FOR QUALIFICATION UNDER IRC §
    18  401] ACQUIRING ANY TYPE OF INTEREST IN A BUSINESS ORGANIZATION
    19  EXISTING UNDER THE LAWS OF ANY JURISDICTION, PROVIDED THAT, IN
    20  ANY SUCH CASE, THE LIABILITY OF THE PUBLIC SCHOOL EMPLOYEES'
    21  RETIREMENT FUND SHALL BE LIMITED TO THE AMOUNT OF ITS
    22  INVESTMENT.
    23     (J)  LEGISLATIVE DECLARATION CONCERNING CERTAIN AUTHORIZED
    24  INVESTMENTS.--THE GENERAL ASSEMBLY FINDS AND DECLARES THAT
    25  AUTHORIZED INVESTMENTS OF THE FUND MADE BY OR ON BEHALF OF THE
    26  BOARD UNDER THIS SECTION WHEREBY THE BOARD BECOMES A JOINT OWNER
    27  OR STOCKHOLDER IN ANY COMPANY, CORPORATION [OR], ASSOCIATION OR
    28  OTHER LAWFUL BUSINESS ORGANIZATION ARE OUTSIDE THE SCOPE OF THE
    29  ORIGINAL INTENT OF AND [THEREFOR] THEREFORE DO NOT VIOLATE THE
    30  PROHIBITION SET FORTH IN SECTION 8 OF ARTICLE VIII OF THE
    20010H0026B1905                 - 59 -

     1  CONSTITUTION OF PENNSYLVANIA.
     2  § 8525.  ANNUITY RESERVE ACCOUNT.
     3     (A)  CREDITS AND CHARGES TO ACCOUNT.--THE ANNUITY RESERVE
     4  ACCOUNT SHALL BE THE LEDGER ACCOUNT TO WHICH SHALL BE CREDITED
     5  THE RESERVES HELD FOR THE PAYMENT OF ANNUITIES AND DEATH
     6  BENEFITS ON ACCOUNT OF ALL ANNUITANTS AND THE CONTRIBUTIONS FROM
     7  THE COMMONWEALTH AND OTHER EMPLOYERS AS DETERMINED IN ACCORDANCE
     8  WITH SECTION 8328 (RELATING TO ACTUARIAL COST METHOD) FOR THE
     9  PAYMENT OF THE SUPPLEMENTAL ANNUITIES PROVIDED IN SECTIONS 8348
    10  (RELATING TO SUPPLEMENTAL ANNUITIES), 8348.1 (RELATING TO
    11  ADDITIONAL SUPPLEMENTAL ANNUITIES) [AND], 8348.2 (RELATING TO
    12  FURTHER ADDITIONAL SUPPLEMENTAL ANNUITIES), 8348.3 (RELATING TO
    13  SUPPLEMENTAL ANNUITIES COMMENCING 1994), 8348.4 (RELATING TO
    14  SPECIAL SUPPLEMENTAL POSTRETIREMENT ADJUSTMENT) AND 8348.5
    15  (RELATING TO SUPPLEMENTAL ANNUITIES COMMENCING 1998). THE
    16  ANNUITY RESERVE ACCOUNT SHALL BE CREDITED WITH VALUATION
    17  INTEREST. AFTER THE TRANSFERS PROVIDED IN SECTIONS 8523
    18  (RELATING TO MEMBERS' SAVINGS ACCOUNT) AND 8524 (RELATING TO
    19  STATE ACCUMULATION ACCOUNT), ALL ANNUITY AND DEATH BENEFIT
    20  PAYMENTS SHALL BE CHARGED TO THE ANNUITY RESERVE ACCOUNT AND
    21  PAID FROM THE FUND.
    22     * * *
    23     SECTION 7.  TITLE 24 IS AMENDED BY ADDING A PART TO READ:
    24                               PART V
    25           HEALTH INSURANCE FOR RETIRED SCHOOL EMPLOYEES
    26  CHAPTER
    27    87.  PRELIMINARY PROVISIONS
    28    89.  GROUP HEALTH INSURANCE PROGRAM
    29    91.  MISCELLANEOUS PROVISIONS
    30                             CHAPTER 87
    20010H0026B1905                 - 60 -

     1                       PRELIMINARY PROVISIONS
     2  SEC.
     3  8701.  SHORT TITLE OF PART.
     4  8702.  DEFINITIONS.
     5  § 8701.  SHORT TITLE OF PART.
     6     THIS PART SHALL BE KNOWN AND MAY BE CITED AS THE PUBLIC
     7  SCHOOL RETIREES' HEALTH INSURANCE ACT.
     8  § 8702.  DEFINITIONS.
     9     (A)  GENERAL RULE.--SUBJECT TO ADDITIONAL DEFINITIONS
    10  CONTAINED IN SUBSEQUENT PROVISIONS OF THIS PART WHICH ARE
    11  APPLICABLE TO SPECIFIC PROVISIONS OF THIS PART, THE FOLLOWING
    12  WORDS AND PHRASES WHEN USED IN THIS PART SHALL HAVE THE MEANINGS
    13  GIVEN TO THEM IN THIS SECTION UNLESS THE CONTEXT CLEARLY
    14  INDICATES OTHERWISE:
    15     "ELIGIBLE PERSON."  AN INDIVIDUAL WHO IS AN ANNUITANT OR
    16  SURVIVOR ANNUITANT, OR THE SPOUSE OR DEPENDENT OF AN ANNUITANT
    17  OR SURVIVOR ANNUITANT.
    18     "FUND."  THE PUBLIC SCHOOL RETIREES' HEALTH INSURANCE FUND.
    19     "PLAN YEAR."  THE PERIOD JULY 1, 2001, THROUGH DECEMBER 31,
    20  2001, SHALL BE THE FIRST PLAN YEAR. AFTER DECEMBER 31, 2001, THE
    21  PLAN YEAR SHALL BE THE CALENDAR YEAR.
    22     "PROGRAM."  THE GROUP HEALTH INSURANCE PROGRAM THAT MAY BE
    23  SPONSORED BY THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD UNDER
    24  THIS PART.
    25     "RESERVE ACCOUNT."  THE RESTRICTED RECEIPT ACCOUNT
    26  ESTABLISHED IN SECTION 8902(B) (RELATING TO PUBLIC SCHOOL
    27  RETIREES' HEALTH INSURANCE FUND).
    28     (B)  ADDITIONAL TERMS.--ANY TERM USED IN THIS PART NOT
    29  DEFINED IN SUBSECTION (A) SHALL BE GOVERNED BY THE DEFINITIONS
    30  GIVEN IN PART IV (RELATING TO RETIREMENT FOR SCHOOL EMPLOYEES)
    20010H0026B1905                 - 61 -

     1  AND THE DEFINITIONS SET FORTH IN PART IV SHALL BE DEEMED TO BE
     2  INCORPORATED INTO THIS PART.
     3                             CHAPTER 89
     4                   GROUP HEALTH INSURANCE PROGRAM
     5  SEC.
     6  8901.  ADMINISTRATION.
     7  8902.  PUBLIC SCHOOL RETIREES' HEALTH INSURANCE FUND.
     8  8903.  MANAGEMENT OF FUND.
     9  § 8901.  ADMINISTRATION.
    10     THE BOARD MAY SPONSOR A GROUP HEALTH INSURANCE PROGRAM TO BE
    11  FUNDED BY AND FOR ELIGIBLE PERSONS. THE BOARD MAY ADMINISTER THE
    12  PROGRAM ITSELF OR THROUGH ANY LEGAL ENTITY AUTHORIZED BY LAW TO
    13  DO SO. THE PROGRAM MAY ALSO BE ADMINISTERED IN WHOLE OR IN PART
    14  ON A FULLY INSURED OR SELF-FUNDED BASIS AT THE BOARD'S SOLE
    15  DISCRETION. IN ADDITION TO THE POWERS GRANTED BY OTHER
    16  PROVISIONS OF THIS PART, THE BOARD SHALL HAVE THE POWERS
    17  NECESSARY OR CONVENIENT TO CARRY OUT THIS PART, INCLUDING, BUT
    18  NOT LIMITED TO, THE POWER TO:
    19         (1)  SET AND ADJUST PREMIUM RATES SUFFICIENT TO MAINTAIN
    20     THE ADEQUACY OF THE RESERVE ESTABLISHED BY THIS PART AND TO
    21     FULLY FUND THE BENEFITS OFFERED BY AND TO PAY FOR THE
    22     ADMINISTRATIVE EXPENSES RELATED TO THE PROGRAM.
    23         (2)  DETERMINE AND MAKE NECESSARY CHANGES TO THE BENEFIT
    24     STRUCTURE FOR THE PROGRAM.
    25         (3)  DETERMINE ENROLLMENT PROCEDURES.
    26         (4)  IMPOSE AND COLLECT NECESSARY FEES AND CHARGES.
    27         (5)  ESTABLISH AN ANNUAL BUDGET FOR THE PROGRAM AND MAKE
    28     DISBURSEMENTS FROM THE FUND THAT ARE CONSISTENT WITH THE
    29     BUDGET.
    30         (6)  CONTRACT FOR GOODS, EQUIPMENT, SERVICES, CONSULTANTS
    20010H0026B1905                 - 62 -

     1     AND OTHER PROFESSIONAL PERSONNEL AS NEEDED TO OPERATE THE
     2     PROGRAM.
     3         (7)  PROVIDE FOR AN ANNUAL AUDIT OF THE FUND AND THE
     4     PROGRAM BY AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM.
     5         (8)  TERMINATE THE PROGRAM OR ANY PORTION OF THE PROGRAM,
     6     AT ANY TIME IF, IN THE BOARD'S DISCRETION, IT IS PRUDENT TO
     7     DO SO.
     8         (9)  SOLICIT AND ACCEPT GIFTS, GRANTS, LOANS AND OTHER
     9     AID FROM ANY PERSON, CORPORATION OR OTHER LEGAL ENTITY OR
    10     FROM THE FEDERAL, STATE OR LOCAL GOVERNMENT AND PARTICIPATE
    11     IN ANY FEDERAL, STATE OR LOCAL GOVERNMENT PROGRAM IF
    12     NECESSARY FOR PRUDENT MANAGEMENT OF THE PROGRAM.
    13         (10)  HEAR AND DETERMINE ANY CLAIMS AND CONTROVERSIES
    14     UNDER THIS PART UNDER 2 PA.C.S. CH. 5 SUBCH. A (RELATING TO
    15     PRACTICE AND PROCEDURE OF COMMONWEALTH AGENCIES) AND CH. 7
    16     SUBCH. A (RELATING TO JUDICIAL REVIEW OF COMMONWEALTH AGENCY
    17     ACTION). THE BOARD'S JURISDICTION UNDER THIS PARAGRAPH SHALL
    18     BE EXCLUSIVE.
    19         (11)  PROMULGATE RULES AND REGULATIONS REGARDING THE
    20     PROGRAM.
    21  § 8902.  PUBLIC SCHOOL RETIREES' HEALTH INSURANCE FUND.
    22     (A)  ESTABLISHMENT OF FUND.--THE PUBLIC SCHOOL RETIREES'
    23  HEALTH INSURANCE FUND IS ESTABLISHED IN THE STATE TREASURY. THE
    24  MONEYS OF THE FUND ARE APPROPRIATED ON A CONTINUING BASIS AND
    25  SHALL BE USED EXCLUSIVELY FOR THE PURPOSES SET FORTH IN THIS
    26  PART. ALL OF THE ASSETS OF THE FUND SHALL BE MAINTAINED AND
    27  ACCOUNTED FOR, SEPARATE FROM ALL OTHER FUNDS AND MONEYS OF THE
    28  COMMONWEALTH AND THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT FUND
    29  IDENTIFIED IN SECTION 8522 (RELATING TO PUBLIC SCHOOL EMPLOYEES'
    30  RETIREMENT FUND).
    20010H0026B1905                 - 63 -

     1     (B)  RESERVE ACCOUNT.--
     2         (1)  A RESTRICTED RESERVE ACCOUNT IS ESTABLISHED WITHIN
     3     THE FUND FOR THE PURPOSE OF ESTABLISHING AND MAINTAINING A
     4     RESERVE SUFFICIENT TO PAY THE EXPECTED CLAIMS EXPERIENCE OF
     5     THE PROGRAM IN THE EVENT THE BOARD ELECTS TO SELF-FUND ALL OR
     6     A PORTION OF THE PROGRAM FOR ANY PLAN YEARS. FOR THE PLAN
     7     YEAR 2002 AND EACH PLAN YEAR THEREAFTER, THE BOARD SHALL
     8     ANNUALLY ESTABLISH THROUGH AN ACTUARY RETAINED BY THE BOARD
     9     THE AMOUNT NECESSARY, IF ANY, TO MAINTAIN THIS RESERVE IN THE
    10     EVENT THE BOARD ELECTS TO SELF-FUND ALL OR A PORTION OF THE
    11     PROGRAM FOR ANY PLAN YEARS. ANY MONEYS NEEDED TO MAINTAIN THE
    12     RESERVE ESTABLISHED BY THIS SUBSECTION SHALL BE COLLECTED
    13     THROUGH THE ADJUSTMENT OF PREMIUM RATES OR THROUGH OTHER
    14     AVAILABLE SOURCES.
    15         (2)  THE MONEYS IN THE RESERVE ACCOUNT MAY BE INVESTED BY
    16     THE BOARD SEPARATE FROM OTHER MONEYS OF THE FUND. ALL
    17     EARNINGS DERIVED FROM INVESTMENT OF THE ASSETS OF THE RESERVE
    18     ACCOUNT SHALL BE CREDITED TO THE RESERVE ACCOUNT.
    19     (C)  TRANSFERS.--THE BOARD MAY TRANSFER MONEYS AMONG THE
    20  VARIOUS ACCOUNTS OF THE FUND, INCLUDING THE RESERVE ACCOUNT
    21  ESTABLISHED BY THE SUBSECTION (B), AS MAY BE NECESSARY TO
    22  SATISFY THE PROVISIONS OF THIS PART. TRANSFERS FROM THE RESERVE
    23  ACCOUNT MAY BE MADE ONLY FOR THE PAYMENT OF CLAIMS OR EXPECTED
    24  CLAIMS AS DETERMINED BY THE ACTUARY RETAINED BY THE BOARD.
    25     (D)  ADMINISTRATION.--THE ASSETS OF THE FUND SHALL BE
    26  PRESERVED, INVESTED AND EXPENDED SOLELY PURSUANT TO AND FOR THE
    27  PURPOSES SET FORTH IN THIS PART.
    28     (E)  COMPOSITION.--THE FUND SHALL CONSIST OF:
    29         (1)  ALL PAYMENTS MADE BY ELIGIBLE PERSONS OR RECEIVED
    30     FROM THE HEALTH INSURANCE ACCOUNT ESTABLISHED BY SECTION 8526
    20010H0026B1905                 - 64 -

     1     (RELATING TO HEALTH INSURANCE ACCOUNT) AND ALL INTEREST,
     2     EARNINGS AND ADDITIONS THERETO.
     3         (2)  ANY OTHER MONEY, PUBLIC OR PRIVATE, APPROPRIATED OR
     4     MADE AVAILABLE TO THE BOARD FOR THE FUND OR THE RESERVE
     5     ACCOUNT FROM ANY SOURCE AND ALL INTEREST, EARNINGS AND
     6     ADDITIONS THERETO.
     7  § 8903.  MANAGEMENT OF FUND.
     8     (A)  CONTROL AND MANAGEMENT OF FUND.--THE MEMBERS OF THE
     9  BOARD SHALL BE THE TRUSTEES OF THE FUND. REGARDLESS OF ANY OTHER
    10  PROVISIONS OF LAW GOVERNING THE INVESTMENT OF FUNDS UNDER THE
    11  CONTROL OF AN ADMINISTRATIVE BOARD OF THE STATE GOVERNMENT, THE
    12  TRUSTEES SHALL HAVE EXCLUSIVE CONTROL AND MANAGEMENT OF THE FUND
    13  AND FULL POWER TO INVEST THE FUND IN ACCORDANCE WITH THE
    14  PROVISIONS OF THIS SECTION, SUBJECT, HOWEVER, TO THE EXERCISE OF
    15  THAT DEGREE OF JUDGMENT, SKILL AND CARE UNDER THE CIRCUMSTANCES
    16  THEN PREVAILING WHICH PERSONS OF PRUDENCE, DISCRETION AND
    17  INTELLIGENCE WHO ARE FAMILIAR WITH SUCH MATTERS EXERCISE IN THE
    18  MANAGEMENT OF THEIR OWN AFFAIRS NOT IN REGARD TO SPECULATION,
    19  BUT IN REGARD TO THE PERMANENT DISPOSITION OF THE FUND,
    20  CONSIDERING THE PROBABLE INCOME TO BE DERIVED THEREFROM AS WELL
    21  AS THE PROBABLE SAFETY OF THEIR CAPITAL. THE TRUSTEES SHALL HAVE
    22  THE POWER TO HOLD, PURCHASE, SELL, LEND, ASSIGN, TRANSFER OR
    23  DISPOSE OF ANY OF THE SECURITIES AND INVESTMENTS IN WHICH ANY OF
    24  THE MONEYS IN THE FUND SHALL HAVE BEEN INVESTED, AS WELL AS OF
    25  THE PROCEEDS OF THE INVESTMENTS, INCLUDING, BUT NOT LIMITED TO,
    26  DIRECTED COMMISSIONS WHICH HAVE ACCRUED TO THE BENEFIT OF THE
    27  FUND AS A CONSEQUENCE OF THE INVESTMENTS AND OF THE MONEYS
    28  BELONGING TO THE FUND, SUBJECT IN EVERY CASE TO MEETING THE
    29  STANDARD OF PRUDENCE SET FORTH IN THIS SECTION.
    30     (B)  CUSTODIAN OF FUND.--THE STATE TREASURER SHALL BE THE
    20010H0026B1905                 - 65 -

     1  CUSTODIAN OF THE FUND.
     2     (C)  PAYMENT FROM FUND.--ALL PAYMENTS FROM THE FUND SHALL BE
     3  MADE BY THE STATE TREASURER IN ACCORDANCE WITH REQUISITIONS
     4  SIGNED BY THE SECRETARY OF THE BOARD OR THE SECRETARY'S
     5  DESIGNEES AND RATIFIED BY RESOLUTION OF THE BOARD. THE BOARD
     6  SHALL REIMBURSE THE STATE TREASURER FOR THE COST OF MAKING
     7  DISBURSEMENTS FROM THE FUND IN THE MANNER PROVIDED BY LAW.
     8                             CHAPTER 91
     9                      MISCELLANEOUS PROVISIONS
    10  SEC.
    11  9101.  STATUS OF PROGRAM RELATIVE TO PUBLIC SCHOOL EMPLOYEES'
    12         RETIREMENT CODE.
    13  9102.  CONSTRUCTION OF PART.
    14  § 9101.  STATUS OF PROGRAM RELATIVE TO PUBLIC SCHOOL EMPLOYEES'
    15             RETIREMENT CODE.
    16     (A)  GENERAL RULE.--THE PROGRAM SHALL BE AN APPROVED HEALTH
    17  INSURANCE PROGRAM FOR PURPOSES OF SECTION 8505(I) (RELATING TO
    18  DUTIES OF BOARD REGARDING APPLICATIONS AND ELECTIONS OF MEMBERS)
    19  AND SHALL BE AN APPROVED INSURANCE CARRIER FOR PURPOSES OF
    20  SECTION 8509 (RELATING TO HEALTH INSURANCE PREMIUM ASSISTANCE
    21  PROGRAM).
    22     (B)  STATE GUARANTEE.--THE PROGRAM SHALL NOT BE SUBJECT TO
    23  THE PROVISIONS OF SECTION 8531 (RELATING TO STATE GUARANTEE).
    24     (C)  HOLD HARMLESS.--NEITHER THE COMMONWEALTH NOR THE BOARD,
    25  INCLUDING THEIR RESPECTIVE OFFICERS, DIRECTORS AND EMPLOYEES,
    26  SHALL BE LIABLE FOR ANY CLAIMS, DEMANDS, ACTIONS OR LIABILITY OF
    27  ANY NATURE, INCLUDING, BUT NOT LIMITED TO, ATTORNEY FEES AND
    28  COURT COSTS, BASED UPON OR ARISING OUT OF THE OPERATION OF THE
    29  PROGRAM, WHETHER INCURRED DIRECTLY OR INDIRECTLY. THE ELIGIBLE
    30  PARTICIPANTS WHO ENROLL AND PARTICIPATE IN THE PROGRAM SHALL BE
    20010H0026B1905                 - 66 -

     1  DEEMED TO AGREE, ON BEHALF OF THEMSELVES AND THEIR HEIRS,
     2  SUCCESSORS AND ASSIGNS, TO HOLD HARMLESS THE COMMONWEALTH AND
     3  THE BOARD, INCLUDING THEIR RESPECTIVE OFFICERS, DIRECTORS AND
     4  EMPLOYEES, FROM ANY CLAIMS, DEMANDS, ACTIONS OR LIABILITY OF ANY
     5  NATURE, WHETHER DIRECTLY OR INDIRECTLY, INCLUDING ATTORNEY FEES
     6  AND COURT COSTS, BASED UPON OR ARISING OUT OF THE OPERATION OF
     7  THE PROGRAM.
     8     (D)  NO RECOURSE.--UNDER NO CIRCUMSTANCES SHALL THE ASSETS OF
     9  THE COMMONWEALTH OR THOSE THAT COMPRISE THE PUBLIC SCHOOL
    10  EMPLOYEES' RETIREMENT FUND AS SET FORTH IN SECTION 8522
    11  (RELATING TO THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT FUND), BE
    12  LIABLE FOR OR USED TO PAY ANY CLAIMS, DEMANDS, ACTIONS OR
    13  LIABILITY OF ANY NATURE, WHETHER DIRECTLY OR INDIRECTLY,
    14  INCLUDING, BUT NOT LIMITED TO, ATTORNEY FEES AND COURT COSTS,
    15  BASED UPON OR ARISING OUT OF THE OPERATION OF THE PROGRAM.
    16     (E)  RESERVATION OF IMMUNITIES.--NOTHING CONTAINED IN THIS
    17  ACT SHALL BE CONSTRUED AS A WAIVER OF THE COMMONWEALTH'S OR
    18  BOARD'S IMMUNITIES, DEFENSES, RIGHTS OR ACTIONS ARISING OUT OF
    19  THEIR SOVEREIGN STATUS OR FROM THE ELEVENTH AMENDMENT TO THE
    20  CONSTITUTION OF THE UNITED STATES.
    21  § 9102.  CONSTRUCTION OF PART.
    22     (A)  GENERAL RULE.--NO PROVISION OF THIS PART SHALL BE
    23  CONSTRUED AS A CANCELLATION OF ANY EXISTING HEALTH INSURANCE
    24  PROGRAM OPERATED BY THE BOARD OR REFERENCED IN SECTION 32 OF THE
    25  ACT OF AUGUST 5, 1991 (P.L.183, NO.23), ENTITLED "AN ACT
    26  AMENDING TITLES 24 (EDUCATION) AND 71 (STATE GOVERNMENT) OF THE
    27  PENNSYLVANIA CONSOLIDATED STATUTES, FURTHER PROVIDING FOR THE
    28  PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM AND THE STATE
    29  EMPLOYEES' RETIREMENT SYSTEM; ADDING AND AMENDING CERTAIN
    30  DEFINITIONS; FURTHER PROVIDING FOR MEMBERSHIP IN THE SYSTEMS,
    20010H0026B1905                 - 67 -

     1  FOR CREDITABLE NONSCHOOL AND NONSTATE SERVICE AND THE PURCHASE
     2  OF CREDIT, FOR INCENTIVES FOR SPECIAL EARLY RETIREMENT, FOR
     3  CONTRIBUTIONS TO THE RETIREMENT FUNDS, FOR ANNUITIES AND THE
     4  RIGHTS AND DUTIES OF ANNUITANTS, FOR HEALTH INSURANCE PREMIUM
     5  ASSISTANCE, FOR BOARD MEMBERSHIP AND FOR THE RE-AMORTIZATION AND
     6  MANAGEMENT OF THE RETIREMENT FUNDS."
     7     (B)  NATURE OF RIGHTS.--ANY TERMINATION OR OTHER MODIFICATION
     8  OF THE PROGRAM, INCLUDING, BUT NOT LIMITED TO, A CHANGE IN
     9  PREMIUM RATES, BENEFIT OPTIONS OR STRUCTURE OR INSURANCE
    10  PROVIDERS, SHALL NOT GIVE RISE TO ANY CONTRACTUAL RIGHTS OR
    11  CLAIMS BY ANY ELIGIBLE PERSONS OR ANY OTHER PERSON CLAIMING AN
    12  INTEREST, EITHER DIRECTLY OR INDIRECTLY, IN THE PROGRAM. NO
    13  PROVISION OF THIS PART, NOR ANY RULE OR REGULATION ADOPTED
    14  PURSUANT TO THIS PART, SHALL CREATE IN ANY PERSON A CONTRACTUAL
    15  RIGHT IN THAT PROVISION.
    16     SECTION 8.  THE DEFINITIONS OF "ACTIVE MEMBER," "CLASS OF
    17  SERVICE MULTIPLIER," "CREDITED SERVICE," "INACTIVE MEMBER,"
    18  "SALARY DEDUCTIONS" AND "VESTEE" IN SECTION 5102 OF TITLE 71 ARE
    19  AMENDED AND THE SECTION IS AMENDED BY ADDING DEFINITIONS TO
    20  READ:
    21  § 5102.  DEFINITIONS.
    22     THE FOLLOWING WORDS AND PHRASES AS USED IN THIS PART, UNLESS
    23  A DIFFERENT MEANING IS PLAINLY REQUIRED BY THE CONTEXT, SHALL
    24  HAVE THE FOLLOWING MEANINGS:
    25     * * *
    26     "ACTIVE MEMBER."  A STATE EMPLOYEE, OR A MEMBER ON LEAVE
    27  WITHOUT PAY, FOR WHOM PICKUP CONTRIBUTIONS ARE BEING MADE TO THE
    28  FUND OR FOR WHOM SUCH CONTRIBUTIONS OTHERWISE REQUIRED FOR
    29  CURRENT STATE SERVICE ARE NOT BEING MADE SOLELY BY REASON OF
    30  SECTION 5502.1 (RELATING TO WAIVER OF REGULAR MEMBER
    20010H0026B1905                 - 68 -

     1  CONTRIBUTIONS AND SOCIAL SECURITY INTEGRATION MEMBER
     2  CONTRIBUTIONS) OR ANY PROVISION OF THIS PART RELATING TO THE
     3  [LIMITATION] LIMITATIONS UNDER SECTION 401(A)(17) OR SECTION
     4  415(B) OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514,
     5  26 U.S.C. § 401(A)(17) OR § 415(B)).
     6     * * *
     7     "ACTUARIAL INCREASE FACTOR."  A FACTOR CALCULATED AT THE
     8  MEMBER'S BIRTHDAY BY DIVIDING THE COST OF A DOLLAR ANNUITY BASED
     9  ON THE AGE OF THE MEMBER ON THE MEMBER'S IMMEDIATELY PREVIOUS
    10  BIRTHDAY BY THE COST OF A ONE-YEAR DEFERRED DOLLAR ANNUITY
    11  CALCULATED AT THAT SAME AGE. UNLESS THE MEMBER TERMINATES STATE
    12  OR SCHOOL SERVICE ON THE MEMBER'S BIRTHDAY, THE ACTUARIAL
    13  INCREASE FACTOR FOR THE YEAR OF TERMINATION SHALL BE ADJUSTED
    14  BY:
    15         (1)  SUBTRACTING ONE FROM THE CALCULATED FACTOR; THEN
    16         (2)  DIVIDING THE DIFFERENCE BY TWELVE; THEN
    17         (3)  MULTIPLYING THE RESULTING QUOTIENT BY THE NUMBER OF
    18     WHOLE MONTHS BETWEEN THE MEMBER'S IMMEDIATELY PREVIOUS
    19     BIRTHDAY AND THE DATE OF TERMINATION OF SERVICE; THEN
    20         (4)  ADDING ONE TO THE RESULTING PRODUCT.
    21     * * *
    22     "CLASS OF SERVICE MULTIPLIER."
    23  CLASS OF SERVICE           MULTIPLIER
    24     A                          1
    25     AA  FOR ALL PURPOSES
    26           EXCEPT
    27           CALCULATING REGULAR
    28           MEMBER CONTRIBUTIONS
    29           ON COMPENSATION
    30           PAID PRIOR TO
    20010H0026B1905                 - 69 -

     1           JANUARY 1, 2002      1.25
     2     AA  FOR PURPOSES
     3           OF CALCULATING
     4           REGULAR MEMBER
     5           CONTRIBUTIONS
     6           ON COMPENSATION
     7           PAID PRIOR TO
     8           JANUARY 1, 2002      1
     9     B                           .625
    10     C                          1
    11     D                          1.25
    12     D-1    PRIOR TO
    13            JANUARY 1, 1973     1.875
    14     D-1    ON AND
    15            SUBSEQUENT TO
    16            JANUARY 1, 1973     1.731
    17     D-2    PRIOR TO
    18            JANUARY 1, 1973     2.5
    19     D-2    ON AND
    20            SUBSEQUENT TO
    21            JANUARY 1, 1973     1.731
    22     D-3    PRIOR TO
    23            JANUARY 1, 1973     3.75
    24     D-3    ON AND
    25            SUBSEQUENT TO
    26            JANUARY 1, 1973     1.731   EXCEPT PRIOR TO DECEMBER
    27                                        1, 1974 AS APPLIED TO ANY
    28                                        ADDITIONAL LEGISLATIVE
    29                                        COMPENSATION AS AN OFFICER
    30                                        OF THE GENERAL ASSEMBLY
    20010H0026B1905                 - 70 -

     1                                        3.75
     2     D-4 FOR ALL PURPOSES
     3           EXCEPT
     4           CALCULATING
     5           REGULAR MEMBER
     6           CONTRIBUTIONS
     7           ON COMPENSATION
     8           PAID PRIOR TO
     9           JULY 1, 2001     1.5
    10     D-4 FOR PURPOSES OF
    11           CALCULATING
    12           REGULAR MEMBER
    13           CONTRIBUTIONS
    14           ON COMPENSATION
    15           PAID PRIOR TO
    16           JULY 1, 2001     1
    17     E, E-1 PRIOR TO
    18            JANUARY 1, 1973     2       FOR EACH OF THE FIRST TEN
    19                                        YEARS OF JUDICIAL SERVICE,
    20                                        AND
    21                                1.5     FOR EACH SUBSEQUENT YEAR
    22                                        OF JUDICIAL SERVICE
    23     E, E-1 ON AND
    24            SUBSEQUENT TO
    25            JANUARY 1, 1973     1.50    FOR EACH OF THE FIRST
    26                                        TEN YEARS OF JUDICIAL
    27                                        SERVICE AND
    28                                1.125   FOR EACH SUBSEQUENT YEAR
    29                                        OF JUDICIAL SERVICE
    30     E-2    PRIOR TO
    20010H0026B1905                 - 71 -

     1            SEPTEMBER 1, 1973   1.5
     2     E-2    ON AND
     3            SUBSEQUENT TO
     4            SEPTEMBER 1, 1973   1.125
     5     G                          0.417
     6     H                          0.500
     7     I                          0.625
     8     J                          0.714
     9     K                          0.834
    10     L                          1.000
    11     M                          1.100
    12     N                          1.250
    13     T-C (PUBLIC SCHOOL         1
    14         EMPLOYEES'
    15         RETIREMENT CODE)
    16     * * *
    17     "CREDITED SERVICE."  STATE OR CREDITABLE NONSTATE SERVICE FOR
    18  WHICH THE REQUIRED CONTRIBUTIONS HAVE BEEN MADE, OR FOR WHICH
    19  THE CONTRIBUTIONS OTHERWISE REQUIRED FOR SUCH SERVICE WERE NOT
    20  MADE SOLELY BY REASON OF SECTION 5502.1 (RELATING TO WAIVER OF
    21  REGULAR MEMBER CONTRIBUTIONS AND SOCIAL SECURITY INTEGRATION
    22  MEMBER CONTRIBUTIONS) OR ANY PROVISION OF THIS PART RELATING TO
    23  THE [LIMITATION] LIMITATIONS UNDER SECTION 401(A)(17) OR 415(B)
    24  OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26
    25  U.S.C. § 401(A)(17) OR § 415(B)), OR FOR WHICH SALARY DEDUCTIONS
    26  OR LUMP SUM PAYMENTS HAVE BEEN AGREED UPON IN WRITING.
    27     * * *
    28     "INACTIVE MEMBER."  A MEMBER FOR WHOM NO PICKUP CONTRIBUTIONS
    29  ARE BEING MADE, EXCEPT IN THE CASE OF AN ACTIVE MEMBER FOR WHOM
    30  SUCH CONTRIBUTIONS OTHERWISE REQUIRED FOR CURRENT STATE SERVICE
    20010H0026B1905                 - 72 -

     1  ARE NOT BEING MADE SOLELY BY REASON OF SECTION 5502.1 (RELATING
     2  TO WAIVER OF REGULAR MEMBER CONTRIBUTIONS AND SOCIAL SECURITY
     3  INTEGRATION MEMBER CONTRIBUTIONS) OR ANY PROVISION OF THIS PART
     4  RELATING TO THE [LIMITATION] LIMITATIONS UNDER SECTION
     5  401(A)(17) OR 415(B) OF THE INTERNAL REVENUE CODE OF 1986
     6  (PUBLIC LAW 99-514, 26 U.S.C. § 401(A)(17) OR § 415(B)), BUT WHO
     7  HAS ACCUMULATED DEDUCTIONS STANDING TO HIS CREDIT IN THE FUND
     8  AND WHO IS NOT ELIGIBLE TO BECOME OR HAS NOT ELECTED TO BECOME A
     9  VESTEE OR HAS NOT FILED AN APPLICATION FOR AN ANNUITY.
    10     * * *
    11     "SALARY DEDUCTIONS."  THE AMOUNTS CERTIFIED BY THE BOARD,
    12  DEDUCTED FROM THE COMPENSATION OF AN ACTIVE MEMBER OR THE SCHOOL
    13  SERVICE COMPENSATION OF A MULTIPLE SERVICE MEMBER WHO IS AN
    14  ACTIVE MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM
    15  AND PAID INTO THE FUND.
    16     * * *
    17     "STATE POLICE OFFICER."  ANY OFFICER OR MEMBER OF THE
    18  PENNSYLVANIA STATE POLICE WHO, ON OR AFTER JULY 1, 1989, SHALL
    19  HAVE BEEN SUBJECT TO THE TERMS OF A COLLECTIVE BARGAINING
    20  AGREEMENT OR BINDING INTEREST ARBITRATION AWARD ESTABLISHED
    21  PURSUANT TO THE ACT OF JUNE 24, 1968 (P.L. 237, NO. 111),
    22  REFERRED TO AS THE POLICEMEN AND FIREMEN COLLECTIVE BARGAINING
    23  ACT.
    24     * * *
    25     "VESTEE."  A MEMBER WITH [TEN] FIVE OR MORE ELIGIBILITY
    26  POINTS, OR A MEMBER WITH CLASS G, CLASS H, CLASS I, CLASS J,
    27  CLASS K, CLASS L, CLASS M OR CLASS N SERVICE WITH [EIGHT] FIVE
    28  OR MORE ELIGIBILITY POINTS, WHO HAS TERMINATED STATE SERVICE AND
    29  HAS ELECTED TO LEAVE HIS TOTAL ACCUMULATED DEDUCTIONS IN THE
    30  FUND AND TO DEFER RECEIPT OF AN ANNUITY.
    20010H0026B1905                 - 73 -

     1     SECTION 9.  SECTIONS 5302(A), 5303(B), 5304(A) AND 5305(B) OF
     2  TITLE 71 ARE AMENDED TO READ:
     3  § 5302.  CREDITED STATE SERVICE.
     4     (A)  COMPUTATION OF CREDITED SERVICE.--IN COMPUTING CREDITED
     5  STATE SERVICE OF A MEMBER FOR THE DETERMINATION OF BENEFITS, A
     6  FULL-TIME SALARIED STATE EMPLOYEE INCLUDING ANY MEMBER OF THE
     7  GENERAL ASSEMBLY, SHALL RECEIVE CREDIT FOR SERVICE IN EACH
     8  PERIOD FOR WHICH CONTRIBUTIONS AS REQUIRED ARE MADE, OR FOR
     9  WHICH CONTRIBUTIONS OTHERWISE REQUIRED FOR SUCH SERVICE WERE NOT
    10  MADE SOLELY BY REASON OF SECTION 5502.1 (RELATING TO WAIVER OF
    11  REGULAR MEMBER CONTRIBUTIONS AND SOCIAL SECURITY INTEGRATION
    12  MEMBER CONTRIBUTIONS) OR ANY PROVISION OF THIS PART RELATING TO
    13  THE [LIMITATION] LIMITATIONS UNDER IRC § 401(A)(17) OR § 415(B),
    14  BUT IN NO CASE SHALL HE RECEIVE MORE THAN ONE YEAR'S CREDIT FOR
    15  ANY 12 CONSECUTIVE MONTHS OR 26 CONSECUTIVE BIWEEKLY PAY
    16  PERIODS. A PER DIEM OR HOURLY STATE EMPLOYEE SHALL RECEIVE ONE
    17  YEAR OF CREDITED SERVICE FOR EACH NONOVERLAPPING PERIOD OF 12
    18  CONSECUTIVE MONTHS OR 26 CONSECUTIVE BIWEEKLY PAY PERIODS IN
    19  WHICH HE IS EMPLOYED AND FOR WHICH CONTRIBUTIONS ARE MADE OR
    20  WOULD HAVE BEEN MADE BUT FOR SUCH [LIMITATION] WAIVER UNDER
    21  SECTION 5502.1 OR LIMITATIONS UNDER THE IRC FOR AT LEAST 220
    22  DAYS OR 1,650 HOURS OF EMPLOYMENT. IF THE MEMBER WAS EMPLOYED
    23  AND CONTRIBUTIONS WERE MADE FOR LESS THAN 220 DAYS OR 1,650
    24  HOURS, HE SHALL BE CREDITED WITH A FRACTIONAL PORTION OF A YEAR
    25  DETERMINED BY THE RATIO OF THE NUMBER OF DAYS OR HOURS OF
    26  SERVICE ACTUALLY RENDERED TO 220 DAYS OR 1,650 HOURS, AS THE
    27  CASE MAY BE. A PART-TIME SALARIED EMPLOYEE SHALL BE CREDITED
    28  WITH THE FRACTIONAL PORTION OF THE YEAR WHICH CORRESPONDS TO THE
    29  NUMBER OF HOURS OR DAYS OF SERVICE ACTUALLY RENDERED IN RELATION
    30  TO 1,650 HOURS OR 220 DAYS, AS THE CASE MAY BE. IN NO CASE SHALL
    20010H0026B1905                 - 74 -

     1  A MEMBER WHO HAS ELECTED MULTIPLE SERVICE RECEIVE AN AGGREGATE
     2  IN THE TWO SYSTEMS OF MORE THAN ONE YEAR OF CREDITED SERVICE FOR
     3  ANY 12 CONSECUTIVE MONTHS.
     4     * * *
     5  § 5303.  RETENTION AND REINSTATEMENT OF SERVICE CREDITS.
     6     * * *
     7     (B)  ELIGIBILITY POINTS FOR PROSPECTIVE CREDITED SERVICE.--
     8         (1)  EVERY ACTIVE MEMBER OF THE SYSTEM OR A MULTIPLE
     9     SERVICE MEMBER WHO IS A SCHOOL EMPLOYEE AND A MEMBER OF THE
    10     PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM ON OR AFTER THE
    11     EFFECTIVE DATE OF THIS PART SHALL RECEIVE ELIGIBILITY POINTS
    12     IN ACCORDANCE WITH SECTION 5307 FOR CURRENT STATE SERVICE,
    13     PREVIOUS STATE SERVICE, OR CREDITABLE NONSTATE SERVICE UPON
    14     COMPLIANCE WITH SECTIONS 5501 (RELATING TO REGULAR MEMBER
    15     CONTRIBUTIONS FOR CURRENT SERVICE), 5504 (RELATING TO MEMBER
    16     CONTRIBUTIONS FOR THE PURCHASE OF CREDIT FOR PREVIOUS STATE
    17     SERVICE OR TO BECOME A FULL COVERAGE MEMBER), 5505 (RELATING
    18     TO CONTRIBUTIONS FOR THE PURCHASE OF CREDIT FOR CREDITABLE
    19     NONSTATE SERVICE), 5505.1 (RELATING TO ADDITIONAL MEMBER
    20     CONTRIBUTIONS) OR 5506 (RELATING TO INCOMPLETE PAYMENTS).
    21     [THE] SUBJECT TO THE LIMITATIONS IN SECTIONS 5306.1 (RELATING
    22     TO ELECTION TO BECOME A CLASS AA MEMBER) AND 5306.2 (RELATING
    23     TO ELECTIONS BY MEMBERS OF THE GENERAL ASSEMBLY), THE CLASS
    24     OR CLASSES OF SERVICE IN WHICH THE MEMBER MAY BE CREDITED FOR
    25     PREVIOUS STATE SERVICE PRIOR TO THE EFFECTIVE DATE OF THIS
    26     PART SHALL BE THE CLASS OR CLASSES IN WHICH HE WAS OR COULD
    27     HAVE AT ANY TIME ELECTED TO BE CREDITED FOR SUCH SERVICE. THE
    28     CLASS OF SERVICE IN WHICH A MEMBER SHALL BE CREDITED FOR
    29     SERVICE SUBSEQUENT TO THE EFFECTIVE DATE OF THIS PART SHALL
    30     BE DETERMINED IN ACCORDANCE WITH SECTION 5306 (RELATING TO
    20010H0026B1905                 - 75 -

     1     CLASSES OF SERVICE).
     2         (1.1)  EVERY ACTIVE MEMBER OF THE SYSTEM WHO ELECTS TO
     3     CONVERT COUNTY SERVICE TO STATE SERVICE PURSUANT TO SECTION
     4     5303.1 (RELATING TO ELECTION TO CONVERT COUNTY SERVICE TO
     5     STATE SERVICE) SHALL RECEIVE ELIGIBILITY POINTS IN ACCORDANCE
     6     WITH SECTION 5307 FOR CONVERTED COUNTY SERVICE UPON
     7     COMPLIANCE WITH SECTION 5303.1(B). THE CLASS OR CLASSES OF
     8     SERVICE IN WHICH THE MEMBER MAY BE CREDITED FOR CONVERTED
     9     COUNTY SERVICE SHALL BE DETERMINED IN ACCORDANCE WITH SECTION
    10     5306(C).
    11         (2)  A SPECIAL VESTEE OR PERSON OTHERWISE ELIGIBLE TO BE
    12     A SPECIAL VESTEE WHO RETURNS TO STATE SERVICE OR WITHDRAWS
    13     HIS ACCUMULATED DEDUCTIONS PURSUANT TO SECTION 5311 (RELATING
    14     TO ELIGIBILITY FOR REFUNDS) OR 5701 (RELATING TO RETURN OF
    15     TOTAL ACCUMULATED DEDUCTIONS) SHALL RECEIVE OR RETAIN
    16     ELIGIBILITY POINTS IN ACCORDANCE WITH PARAGRAPH (1) BUT UPON
    17     SUBSEQUENT TERMINATION OF STATE SERVICE SHALL ONLY BE
    18     ELIGIBLE TO BE AN ANNUITANT VESTEE OR INACTIVE MEMBER WITHOUT
    19     REGARD TO PREVIOUS STATUS AS A SPECIAL VESTEE AND WITHOUT
    20     REGARD TO THE PROVISIONS OF THIS PART PROVIDING FOR SPECIAL
    21     VESTEES.
    22         (3)  A SPECIAL VESTEE OR PERSON OTHERWISE ELIGIBLE TO BE
    23     A SPECIAL VESTEE WHO BECOMES AN ACTIVE MEMBER OF THE PUBLIC
    24     SCHOOL EMPLOYEES' RETIREMENT SYSTEM AND ELECTS MULTIPLE
    25     SERVICE SHALL RECEIVE OR RETAIN ELIGIBILITY POINTS AS
    26     OTHERWISE PROVIDED FOR IN THIS PART AND 24 PA.C.S. PT. IV
    27     (RELATING TO RETIREMENT FOR SCHOOL EMPLOYEES) BUT UPON
    28     SUBSEQUENT TERMINATION OF SCHOOL SERVICE SHALL ONLY BE
    29     ELIGIBLE TO BE AN ANNUITANT, VESTEE OR INACTIVE MEMBER AS
    30     OTHERWISE ELIGIBLE AS A MULTIPLE SERVICE MEMBER WITHOUT
    20010H0026B1905                 - 76 -

     1     REGARD TO PREVIOUS STATUS AS A SPECIAL VESTEE AND WITHOUT
     2     REGARD TO THE PROVISIONS OF THIS PART PROVIDING FOR SPECIAL
     3     VESTEES.
     4     * * *
     5  § 5304.  CREDITABLE NONSTATE SERVICE.
     6     (A)  ELIGIBILITY.--AN ACTIVE MEMBER OR A MULTIPLE SERVICE
     7  MEMBER WHO IS A SCHOOL EMPLOYEE AND AN ACTIVE MEMBER OF THE
     8  PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM SHALL BE ELIGIBLE FOR
     9  CLASS A SERVICE CREDIT FOR CREDITABLE NONSTATE SERVICE AS SET
    10  FORTH IN SUBSECTIONS (B) AND (C) EXCEPT THAT INTERVENING
    11  MILITARY SERVICE SHALL BE CREDITED IN THE CLASS OF SERVICE FOR
    12  WHICH THE MEMBER WAS ELIGIBLE AT THE TIME OF ENTERING INTO
    13  MILITARY SERVICE AND FOR WHICH HE MAKES THE REQUIRED
    14  CONTRIBUTIONS AND EXCEPT THAT A MULTIPLE SERVICE MEMBER WHO IS A
    15  SCHOOL EMPLOYEE AND AN ACTIVE MEMBER OF THE PUBLIC SCHOOL
    16  EMPLOYEES' RETIREMENT SYSTEM SHALL NOT BE ELIGIBLE TO PURCHASE
    17  SERVICE CREDIT FOR CREDITABLE NONSTATE SERVICE SET FORTH IN
    18  SUBSECTION (C)(5).
    19     * * *
    20  § 5305.  SOCIAL SECURITY INTEGRATION CREDITS.
    21     * * *
    22     (B)  ACCRUAL OF SUBSEQUENT CREDITS.--ANY MEMBER WHO HAS
    23  SOCIAL SECURITY INTEGRATION ACCUMULATED DEDUCTIONS TO HIS CREDIT
    24  OR IS RECEIVING A BENEFIT ON ACCOUNT OF SOCIAL SECURITY
    25  INTEGRATION CREDITS MAY ACCRUE ONE SOCIAL SECURITY INTEGRATION
    26  CREDIT FOR EACH YEAR OF SERVICE AS A STATE EMPLOYEE ON OR
    27  SUBSEQUENT TO MARCH 1, 1974 AND A FRACTIONAL CREDIT FOR A
    28  CORRESPONDING FRACTIONAL YEAR OF SERVICE PROVIDED THAT
    29  CONTRIBUTIONS ARE MADE, OR WOULD HAVE BEEN MADE BUT FOR SECTION
    30  5502.1 (RELATING TO WAIVER OF REGULAR MEMBER CONTRIBUTIONS AND
    20010H0026B1905                 - 77 -

     1  SOCIAL SECURITY INTEGRATION MEMBER CONTRIBUTIONS) OR THE
     2  LIMITATIONS UNDER IRC § 401(A)(17) OR § 415(B), IN ACCORDANCE
     3  WITH SECTION 5502 (RELATING TO [SOCIAL SECURITY] SOCIAL SECURITY
     4  INTEGRATION MEMBER CONTRIBUTIONS), AND HE:
     5         (1)  CONTINUES SUBSEQUENT TO MARCH 1, 1974 AS AN ACTIVE
     6     MEMBER IN EITHER THE STATE OR SCHOOL SYSTEM;
     7         (2)  TERMINATES SUCH CONTINUOUS SERVICE IN THE STATE OR
     8     SCHOOL SYSTEM AND RETURNS TO ACTIVE MEMBERSHIP IN THE STATE
     9     SYSTEM WITHIN SIX MONTHS; OR
    10         (3)  TERMINATES HIS STATUS AS A VESTEE OR AN ANNUITANT
    11     AND RETURNS TO STATE SERVICE.
    12     * * *
    13     SECTION 10.  TITLE 71 IS AMENDED BY ADDING A SECTION TO READ:
    14  § 5305.1.  ELIGIBILITY FOR ACTUARIAL INCREASE FACTOR.
    15     A PERSON WHO IS:
    16         (1)  AN ACTIVE MEMBER;
    17         (2)  AN INACTIVE MEMBER ON LEAVE WITHOUT PAY; OR
    18         (3)  A MULTIPLE SERVICE MEMBER WHO IS A SCHOOL EMPLOYEE
    19     AND AN ACTIVE MEMBER OF THE PUBLIC SCHOOL EMPLOYEES'
    20     RETIREMENT SYSTEM,
    21  WHO TERMINATES STATE SERVICE OR SCHOOL SERVICE, AS THE CASE MAY
    22  BE, AFTER ATTAINING AGE 70 AND WHO APPLIES FOR A SUPERANNUATION
    23  ANNUITY WITH AN EFFECTIVE DATE OF RETIREMENT THE DAY AFTER THE
    24  DATE OF TERMINATION OF STATE SERVICE OR SCHOOL SERVICE, SHALL
    25  HAVE THAT PERSON'S MAXIMUM SINGLE LIFE ANNUITY CALCULATED
    26  PURSUANT TO SECTION 5702(A.1) (RELATING TO MAXIMUM SINGLE LIFE
    27  ANNUITY).
    28     SECTION 11.  SECTION 5306(A) AND (B) OF TITLE 71 ARE AMENDED
    29  AND THE SECTION IS AMENDED BY ADDING SUBSECTIONS TO READ:
    30  § 5306.  CLASSES OF SERVICE.
    20010H0026B1905                 - 78 -

     1     (A)  CLASS A MEMBERSHIP.--A STATE EMPLOYEE WHO IS A MEMBER OF
     2  CLASS A ON THE EFFECTIVE DATE OF THIS PART OR WHO BECOMES A
     3  MEMBER OF THE SYSTEM SUBSEQUENT TO THE EFFECTIVE DATE OF THIS
     4  PART SHALL BE CLASSIFIED AS A CLASS A MEMBER AND RECEIVE CREDIT
     5  FOR CLASS A SERVICE UPON PAYMENT OF REGULAR AND ADDITIONAL
     6  MEMBER CONTRIBUTIONS FOR CLASS A SERVICE[.], PROVIDED THAT THE
     7  STATE EMPLOYEE DOES NOT BECOME A MEMBER OF CLASS AA PURSUANT TO
     8  SUBSECTION (A.1) OR A MEMBER OF CLASS D-4 PURSUANT TO SUBSECTION
     9  (A.2).
    10     (A.1)  CLASS AA MEMBERSHIP.--
    11         (1)  A PERSON WHO BECOMES A STATE EMPLOYEE AND AN ACTIVE
    12     MEMBER OF THE SYSTEM AFTER JUNE 30, 2001, AND WHO IS NOT A
    13     STATE POLICE OFFICER AND NOT EMPLOYED IN A POSITION FOR WHICH
    14     A CLASS OF SERVICE OTHER THAN CLASS A IS CREDITED OR COULD BE
    15     ELECTED, SHALL BE CLASSIFIED AS A CLASS AA MEMBER AND RECEIVE
    16     CREDIT FOR CLASS AA STATE SERVICE UPON PAYMENT OF REGULAR
    17     MEMBER CONTRIBUTIONS FOR CLASS AA SERVICE AND, SUBJECT TO THE
    18     LIMITATIONS CONTAINED IN PARAGRAPH (7), IF PREVIOUSLY A
    19     MEMBER OF CLASS A, OR PREVIOUSLY EMPLOYED IN A POSITION FOR
    20     WHICH CLASS A SERVICE COULD HAVE BEEN EARNED, SHALL HAVE ALL
    21     CLASS A STATE SERVICE (OTHER THAN STATE SERVICE PERFORMED AS
    22     A STATE POLICE OFFICER OR FOR WHICH A CLASS OF SERVICE OTHER
    23     THAN CLASS A WAS EARNED OR COULD HAVE BEEN ELECTED)
    24     CLASSIFIED AS CLASS AA SERVICE.
    25         (2)  A PERSON WHO IS A STATE EMPLOYEE ON JUNE 30, 2001,
    26     AND JULY 1, 2001, BUT IS NOT AN ACTIVE MEMBER OF THE SYSTEM
    27     BECAUSE MEMBERSHIP IN THE SYSTEM IS OPTIONAL OR PROHIBITED
    28     PURSUANT TO SECTION 5301 (RELATING TO MANDATORY AND OPTIONAL
    29     MEMBERSHIP) AND WHO BECOMES AN ACTIVE MEMBER AFTER JUNE 30,
    30     2001, AND WHO IS NOT A STATE POLICE OFFICER AND NOT EMPLOYED
    20010H0026B1905                 - 79 -

     1     IN A POSITION FOR WHICH A CLASS OF SERVICE OTHER THAN CLASS A
     2     IS CREDITED OR COULD BE ELECTED, SHALL BE CLASSIFIED AS A
     3     CLASS AA MEMBER AND RECEIVE CREDIT FOR CLASS AA STATE SERVICE
     4     UPON PAYMENT OF REGULAR MEMBER CONTRIBUTIONS FOR CLASS AA
     5     SERVICE AND, SUBJECT TO THE LIMITATIONS CONTAINED IN
     6     PARAGRAPH (7), IF PREVIOUSLY A MEMBER OF CLASS A, OR
     7     PREVIOUSLY EMPLOYED IN A POSITION FOR WHICH CLASS A SERVICE
     8     COULD HAVE BEEN EARNED, SHALL HAVE ALL CLASS A STATE SERVICE
     9     (OTHER THAN STATE SERVICE PERFORMED AS A STATE POLICE OFFICER
    10     OR FOR WHICH A CLASS OF SERVICE OTHER THAN CLASS A WAS EARNED
    11     OR COULD HAVE BEEN ELECTED) CLASSIFIED AS CLASS AA SERVICE.
    12         (3)  PROVIDED THAT AN ELECTION TO BECOME A CLASS AA
    13     MEMBER IS MADE PURSUANT TO SECTION 5306.1 (RELATING TO
    14     ELECTION TO BECOME A CLASS AA MEMBER), A STATE EMPLOYEE,
    15     OTHER THAN A STATE EMPLOYEE WHO IS A STATE POLICE OFFICER ON
    16     OR AFTER JULY 1, 1989, WHO ON JUNE 30, 2001, AND JULY 1,
    17     2001, IS:
    18             (I)  A MEMBER OF CLASS A, OTHER THAN A MEMBER OF
    19         CLASS A WHO COULD HAVE ELECTED MEMBERSHIP IN A CLASS C,
    20         CLASS D-3, CLASS E-1 OR CLASS E-2; OR
    21             (II)  AN INACTIVE MEMBER ON A LEAVE WITHOUT PAY FROM
    22         A POSITION IN WHICH THE STATE EMPLOYEE WOULD BE A CLASS A
    23         ACTIVE MEMBER IF THE EMPLOYEE WAS NOT ON LEAVE WITHOUT
    24         PAY, OTHER THAN A POSITION IN WHICH THE STATE EMPLOYEE
    25         COULD ELECT MEMBERSHIP IN CLASS C, CLASS D-3, CLASS E-1
    26         OR CLASS E-2,
    27     SHALL BE CLASSIFIED AS A CLASS AA MEMBER AND RECEIVE CREDIT
    28     FOR CLASS AA STATE SERVICE PERFORMED AFTER JUNE 30, 2001,
    29     UPON PAYMENT OF REGULAR MEMBER CONTRIBUTIONS FOR CLASS AA
    30     SERVICE AND, SUBJECT TO THE LIMITATIONS CONTAINED IN
    20010H0026B1905                 - 80 -

     1     PARAGRAPH (7), SHALL RECEIVE CLASS AA SERVICE CREDIT FOR ALL
     2     CLASS A STATE SERVICE, OTHER THAN STATE SERVICE PERFORMED AS
     3     A STATE POLICE OFFICER OR AS A STATE EMPLOYEE IN A POSITION
     4     FOR WHICH THE MEMBER COULD HAVE ELECTED MEMBERSHIP IN CLASS
     5     C, CLASS D-3, CLASS E-1 OR CLASS E-2, PERFORMED BEFORE JULY
     6     1, 2001.
     7         (4)  PROVIDED THAT AN ELECTION TO BECOME A CLASS AA
     8     MEMBER IS MADE PURSUANT TO SECTION 5306.1 (RELATING TO
     9     ELECTION TO BECOME A CLASS AA MEMBER), A FORMER STATE
    10     EMPLOYEE, OTHER THAN A FORMER STATE EMPLOYEE WHO WAS A STATE
    11     POLICE OFFICER ON OR AFTER JULY 1, 1989, WHO ON JUNE 30,
    12     2001, AND JULY 1, 2001, IS A MULTIPLE SERVICE MEMBER AND A
    13     SCHOOL EMPLOYEE AND A MEMBER OF THE PUBLIC SCHOOL EMPLOYEES'
    14     RETIREMENT SYSTEM, SUBJECT TO THE LIMITATIONS CONTAINED IN
    15     PARAGRAPH (7), SHALL RECEIVE CLASS AA SERVICE CREDIT FOR ALL
    16     CLASS A STATE SERVICE, OTHER THAN STATE SERVICE PERFORMED AS
    17     A STATE POLICE OFFICER OR AS A STATE EMPLOYEE IN A POSITION
    18     IN WHICH THE FORMER STATE EMPLOYEE COULD HAVE ELECTED A CLASS
    19     OF SERVICE OTHER THAN CLASS A, PERFORMED BEFORE JULY 1, 2001.
    20         (5)  A FORMER STATE EMPLOYEE, OTHER THAN A FORMER STATE
    21     EMPLOYEE WHO WAS A STATE POLICE OFFICER ON OR AFTER JULY 1,
    22     1989, WHO IS A SCHOOL EMPLOYEE AND WHO ON OR AFTER JULY 1,
    23     2001, BECOMES A MULTIPLE SERVICE MEMBER, SUBJECT TO THE
    24     LIMITATIONS CONTAINED IN PARAGRAPH (7), SHALL RECEIVE CLASS
    25     AA SERVICE CREDIT FOR ALL CLASS A STATE SERVICE OTHER THAN
    26     STATE SERVICE PERFORMED AS A STATE EMPLOYEE IN A POSITION IN
    27     WHICH THE FORMER STATE EMPLOYEE COULD HAVE ELECTED A CLASS OF
    28     SERVICE OTHER THAN CLASS A.
    29         (6)  A STATE EMPLOYEE WHO AFTER JUNE 30, 2001, BECOMES A
    30     STATE POLICE OFFICER OR WHO IS EMPLOYED IN A POSITION IN
    20010H0026B1905                 - 81 -

     1     WHICH THE MEMBER COULD ELECT MEMBERSHIP IN A CLASS OF SERVICE
     2     OTHER THAN CLASS AA OR CLASS D-4 SHALL RETAIN ANY CLASS AA
     3     SERVICE CREDITED PRIOR TO BECOMING A STATE POLICE OFFICER OR
     4     BEING SO EMPLOYED, BUT SHALL BE INELIGIBLE TO RECEIVE CLASS
     5     AA CREDIT THEREAFTER, AND INSTEAD SHALL RECEIVE CLASS A
     6     CREDIT UNLESS A CLASS OF MEMBERSHIP OTHER THAN CLASS A IS
     7     ELECTED.
     8         (7)  (I)  STATE SERVICE PERFORMED AS CLASS A SERVICE
     9         BEFORE JULY 1, 2001, AND STATE SERVICE FOR WHICH CLASS A
    10         SERVICE COULD HAVE BEEN CREDITED BUT WAS NOT CREDITED
    11         BECAUSE MEMBERSHIP IN THE SYSTEM WAS OPTIONAL OR
    12         PROHIBITED PURSUANT TO SECTION 5301, SHALL BE CREDITED AS
    13         CLASS AA SERVICE ONLY UPON THE COMPLETION OF ALL ACTS
    14         NECESSARY FOR THE STATE SERVICE TO BE CREDITED AS CLASS A
    15         SERVICE HAD THIS SUBSECTION NOT BEEN ENACTED AND UPON
    16         PAYMENT OF REQUIRED CLASS AA MEMBER CONTRIBUTIONS AS
    17         PROVIDED IN SECTION 5504 (RELATING TO MEMBER
    18         CONTRIBUTIONS FOR THE PURCHASE OF CREDIT FOR PREVIOUS
    19         STATE SERVICE OR TO BECOME A FULL COVERAGE MEMBER).
    20             (II)  A PERSON WHO IS NOT A STATE EMPLOYEE OR A
    21         SCHOOL EMPLOYEE ON JUNE 30, 2001, AND JULY 1, 2001, AND
    22         WHO HAS PREVIOUS STATE SERVICE (EXCEPT A DISABILITY
    23         ANNUITANT WHO RETURNS TO STATE SERVICE AFTER JUNE 30,
    24         2001, UPON TERMINATION OF THE DISABILITY ANNUITY) SHALL
    25         NOT RECEIVE CLASS AA SERVICE CREDIT FOR STATE SERVICE
    26         PERFORMED BEFORE JULY 1, 2001, UNTIL SUCH PERSON BECOMES
    27         AN ACTIVE MEMBER, OR AN ACTIVE MEMBER OF THE PUBLIC
    28         SCHOOL EMPLOYEES' RETIREMENT SYSTEM AND A MULTIPLE
    29         SERVICE MEMBER, AND EARNS THREE ELIGIBILITY POINTS BY
    30         PERFORMING CREDITED STATE SERVICE OR CREDITED SCHOOL
    20010H0026B1905                 - 82 -

     1         SERVICE AFTER JUNE 30, 2001.
     2     (A.2)  CLASS OF MEMBERSHIP FOR MEMBERS OF THE GENERAL
     3  ASSEMBLY.--
     4         (1)  A PERSON WHO:
     5             (I)  BECOMES A MEMBER OF THE GENERAL ASSEMBLY AND AN
     6         ACTIVE MEMBER OF THE SYSTEM AFTER JUNE 30, 2001; OR
     7             (II)  IS A MEMBER OF THE GENERAL ASSEMBLY ON JULY 1,
     8         2001, BUT IS NOT AN ACTIVE MEMBER OF THE SYSTEM BECAUSE
     9         MEMBERSHIP IN THE SYSTEM IS OPTIONAL PURSUANT TO SECTION
    10         5301 AND WHO BECOMES AN ACTIVE MEMBER AFTER JUNE 30,
    11         2001,
    12     AND WHO WAS NOT A STATE POLICE OFFICER ON OR AFTER JULY 1,
    13     1989, SHALL BE CLASSIFIED AS A CLASS D-4 MEMBER AND RECEIVE
    14     CREDIT AS A CLASS D-4 MEMBER FOR ALL STATE SERVICE AS A
    15     MEMBER OF THE GENERAL ASSEMBLY UPON PAYMENT OF REGULAR MEMBER
    16     CONTRIBUTIONS FOR CLASS D-4 SERVICE AND, SUBJECT TO THE
    17     LIMITATIONS CONTAINED IN SUBSECTION (A.1)(7), IF PREVIOUSLY A
    18     MEMBER OF CLASS A, OR EMPLOYED IN A POSITION FOR WHICH CLASS
    19     A SERVICE COULD HAVE BEEN EARNED, SHALL RECEIVE CLASS AA
    20     SERVICE CREDIT FOR ALL CLASS A STATE SERVICE, OTHER THAN
    21     STATE SERVICE PERFORMED AS A STATE POLICE OFFICER OR FOR
    22     WHICH A CLASS OF SERVICE OTHER THAN CLASS A OR CLASS D-4 WAS
    23     OR COULD HAVE BEEN ELECTED OR CREDITED.
    24         (2)  PROVIDED AN ELECTION TO BECOME A CLASS D-4 MEMBER IS
    25     MADE PURSUANT TO SECTION 5306.2, A STATE EMPLOYEE WHO WAS NOT
    26     A STATE POLICE OFFICER ON OR AFTER JULY 1, 1989, WHO ON JULY
    27     1, 2001, IS A MEMBER OF THE GENERAL ASSEMBLY AND AN ACTIVE
    28     MEMBER OF THE SYSTEM, AND NOT A MEMBER OF CLASS D-3, SHALL BE
    29     CLASSIFIED AS A CLASS D-4 MEMBER AND RECEIVE CREDIT AS A
    30     CLASS D-4 MEMBER FOR ALL STATE SERVICE PERFORMED AS A MEMBER
    20010H0026B1905                 - 83 -

     1     OF THE GENERAL ASSEMBLY NOT CREDITED AS ANOTHER CLASS OTHER
     2     THAN CLASS A UPON PAYMENT OF REGULAR MEMBER CONTRIBUTIONS FOR
     3     CLASS D-4 SERVICE AND, SUBJECT TO THE LIMITATIONS CONTAINED
     4     IN PARAGRAPH (A.1)(7), SHALL RECEIVE CLASS AA SERVICE CREDIT
     5     FOR ALL CLASS A STATE SERVICE, OTHER THAN STATE SERVICE
     6     PERFORMED AS A STATE POLICE OFFICER OR AS A STATE EMPLOYEE IN
     7     A POSITION IN WHICH THE MEMBER COULD HAVE ELECTED A CLASS OF
     8     SERVICE OTHER THAN CLASS A, PERFORMED BEFORE JULY 1, 2001.
     9         (3)  A MEMBER OF THE GENERAL ASSEMBLY WHO AFTER JUNE 30,
    10     2001, BECOMES A STATE POLICE OFFICER SHALL RETAIN ANY CLASS
    11     AA SERVICE OR CLASS D-4 SERVICE CREDITED PRIOR TO BECOMING A
    12     STATE POLICE OFFICER OR BEING SO EMPLOYED, BUT SHALL BE
    13     INELIGIBLE TO RECEIVE CLASS AA OR CLASS D-4 CREDIT
    14     THEREAFTER, AND INSTEAD SHALL RECEIVE CLASS A CREDIT.
    15     (B)  OTHER CLASS MEMBERSHIP.--A STATE EMPLOYEE WHO IS A
    16  MEMBER OF A CLASS SERVICE OTHER THAN CLASS A ON THE EFFECTIVE
    17  DATE OF THIS PART SHALL RETAIN HIS MEMBERSHIP IN THAT CLASS
    18  UNTIL SUCH SERVICE IS DISCONTINUED; ANY SERVICE THEREAFTER SHALL
    19  BE CREDITED AS CLASS A SERVICE, CLASS AA SERVICE OR CLASS D-4
    20  SERVICE AS PROVIDED FOR IN THIS SECTION.
    21     * * *
    22     SECTION 12.  TITLE 71 IS AMENDED BY ADDING SECTIONS TO READ:
    23  § 5306.1.  ELECTION TO BECOME A CLASS AA MEMBER.
    24     (A)  GENERAL RULE.--A PERSON WHO IS:
    25         (1)  A MEMBER OF THE SYSTEM; OR
    26         (2)  A MULTIPLE SERVICE MEMBER WHO IS A SCHOOL EMPLOYEE
    27     AND A MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT
    28     SYSTEM
    29  WHO ON JULY 1, 2001, IS ELIGIBLE FOR CLASS AA MEMBERSHIP MAY
    30  ELECT TO BECOME A MEMBER OF CLASS AA.
    20010H0026B1905                 - 84 -

     1     (B)  TIME FOR MAKING ELECTION.--THE ELECTION TO BECOME A
     2  CLASS AA MEMBER MUST BE MADE BY THE MEMBER FILING WRITTEN NOTICE
     3  WITH THE BOARD BEFORE JANUARY 1, 2002, OR BEFORE THE MEMBER
     4  TERMINATES STATE SERVICE, OR, IF A SCHOOL EMPLOYEE, TERMINATES
     5  SCHOOL SERVICE, WHICHEVER OCCURS FIRST.
     6     (C)  EFFECT OF ELECTION.--AN ELECTION TO BECOME A CLASS AA
     7  MEMBER SHALL BECOME EFFECTIVE THE LATER OF JULY 1, 2001, OR THE
     8  DATE WHEN THE ELECTION IS FILED WITH THE BOARD AND SHALL REMAIN
     9  IN EFFECT UNTIL THE TERMINATION OF EMPLOYMENT. UPON TERMINATION
    10  AND SUBSEQUENT REEMPLOYMENT, THE MEMBER'S CLASS OF SERVICE SHALL
    11  BE CREDITED IN THE CLASS OF SERVICE OTHERWISE PROVIDED FOR IN
    12  THIS PART.
    13     (D)  EFFECT OF FAILURE TO MAKE ELECTION.--FAILURE TO ELECT TO
    14  BECOME A CLASS AA MEMBER WITHIN THE ELECTION PERIOD SET FORTH IN
    15  SUBSECTION (B) SHALL RESULT IN ALL OF THE MEMBER'S CLASS A STATE
    16  SERVICE OTHER THAN SERVICE PERFORMED AS A STATE POLICE OFFICER
    17  OR IN A POSITION IN WHICH THE MEMBER COULD ELECT A CLASS OF
    18  MEMBERSHIP OTHER THAN CLASS A BEING CREDITED AS CLASS A SERVICE
    19  AND NOT SUBJECT TO FURTHER ELECTION OR CREDITING AS CLASS AA
    20  SERVICE UPON TERMINATION AND SUBSEQUENT EMPLOYMENT.
    21  § 5306.2.  ELECTIONS BY MEMBERS OF THE GENERAL ASSEMBLY.
    22     (A)  GENERAL RULE.--A MEMBER OF THE GENERAL ASSEMBLY WHO ON
    23  THE EFFECTIVE DATE OF THIS SECTION, IS ELIGIBLE FOR CLASS D-4
    24  MEMBERSHIP MAY ELECT TO BECOME A MEMBER OF CLASS D-4. THE
    25  ELECTION TO BECOME A CLASS D-4 MEMBER MUST BE MADE BY THE MEMBER
    26  OF THE GENERAL ASSEMBLY BY FILING WRITTEN NOTICE WITH THE BOARD
    27  BEFORE JULY 1, 2001, OR BEFORE THE MEMBER TERMINATES STATE
    28  SERVICE AS A MEMBER OF THE GENERAL ASSEMBLY, WHICHEVER OCCURS
    29  FIRST.
    30     (B)  EFFECT OF ELECTION.--MEMBERSHIP AS A CLASS D-4 MEMBER
    20010H0026B1905                 - 85 -

     1  SHALL BECOME EFFECTIVE ON JULY 1, 2001, AND SHALL REMAIN IN
     2  EFFECT UNTIL THE TERMINATION OF SERVICE AS A MEMBER OF THE
     3  GENERAL ASSEMBLY. UPON TERMINATION AND SUBSEQUENT REEMPLOYMENT,
     4  THE MEMBER'S CLASS OF SERVICE SHALL BE CREDITED IN THE CLASS OF
     5  SERVICE OTHERWISE PROVIDED FOR IN THIS PART.
     6     (C)  EFFECT OF FAILURE TO MAKE ELECTION.--A MEMBER OF THE
     7  GENERAL ASSEMBLY WHO IS A MEMBER OF CLASS A AS A RESULT OF
     8  FAILURE TO ELECT TO BECOME A MEMBER OF ANOTHER CLASS OR WHO IS A
     9  MEMBER OF ANOTHER CLASS OTHER THAN CLASS D-4 AS A RESULT OF
    10  ELECTING MEMBERSHIP IN SUCH CLASS FOR LEGISLATIVE SERVICE, SHALL
    11  NOT BE ELIGIBLE TO RECEIVE OR ELECT A DIFFERENT CLASS OF SERVICE
    12  FOR SUCH LEGISLATIVE SERVICE EITHER DURING THE PERIOD OF
    13  LEGISLATIVE SERVICE, OR UPON TERMINATION AND SUBSEQUENT
    14  EMPLOYMENT.
    15     SECTION 13.  SECTIONS 5307, 5308(B), 5309, 5501 AND 5502 OF
    16  TITLE 71 ARE AMENDED TO READ:
    17  § 5307.  ELIGIBILITY POINTS.
    18     (A)  GENERAL RULE.--AN ACTIVE MEMBER OF THE SYSTEM SHALL
    19  ACCRUE ONE ELIGIBILITY POINT FOR EACH YEAR OF CREDITED SERVICE
    20  AS A MEMBER OF THE STATE OR THE PUBLIC SCHOOL EMPLOYEES'
    21  RETIREMENT SYSTEM. A MEMBER SHALL ACCRUE AN ADDITIONAL TWO-
    22  THIRDS OF AN ELIGIBILITY POINT FOR EACH YEAR OF CLASS D-3
    23  CREDITED SERVICE. IN THE CASE OF A FRACTIONAL PART OF A YEAR OF
    24  CREDITED SERVICE, A MEMBER SHALL ACCRUE THE CORRESPONDING
    25  FRACTIONAL PORTION OF ELIGIBILITY POINTS TO WHICH THE CLASS OF
    26  SERVICE ENTITLES HIM.
    27     (B)  TRANSITIONAL RULE.--
    28         (1)  IN DETERMINING WHETHER A MEMBER WHO IS NOT A STATE
    29     EMPLOYEE OR SCHOOL EMPLOYEE ON JUNE 30, 2001, AND JULY 1,
    30     2001, AND WHO HAS PREVIOUS STATE SERVICE (EXCEPT A DISABILITY
    20010H0026B1905                 - 86 -

     1     ANNUITANT WHO RETURNS TO STATE SERVICE AFTER JUNE 30, 2001,
     2     UPON TERMINATION OF THE DISABILITY ANNUITY) HAS THE FIVE
     3     ELIGIBILITY POINTS REQUIRED BY SECTION 5102 (RELATING TO
     4     DEFINITIONS), 5308(B) (RELATING TO ELIGIBILITY FOR
     5     ANNUITIES), 5309 (RELATING TO ELIGIBILITY FOR VESTING),
     6     5704(B) (RELATING TO DISABILITY ANNUITIES) AND 5705(A)
     7     (RELATING TO MEMBER'S OPTIONS), ONLY ELIGIBILITY POINTS
     8     EARNED BY PERFORMING CREDITED STATE SERVICE OR CREDITED
     9     SCHOOL SERVICE AFTER JUNE 30, 2001, SHALL BE COUNTED UNTIL
    10     SUCH MEMBER EARNS ONE ELIGIBILITY POINT BY PERFORMING
    11     CREDITED STATE SERVICE OR CREDITED SCHOOL SERVICE AFTER JUNE
    12     30, 2001, AT WHICH TIME ALL ELIGIBILITY POINTS AS DETERMINED
    13     PURSUANT TO SUBSECTION (A) SHALL BE COUNTED.
    14         (2)  ANY MEMBER TO WHOM PARAGRAPH (1) APPLIES SHALL BE
    15     CONSIDERED TO HAVE SATISFIED ANY REQUIREMENT FOR FIVE
    16     ELIGIBILITY POINTS CONTAINED IN THIS PART IF THE MEMBER:
    17             (I)  HAS TEN OR MORE ELIGIBILITY POINTS AS DETERMINED
    18         PURSUANT TO SUBSECTION (A); OR
    19             (II)  HAS CLASS G, CLASS H, CLASS I, CLASS J, CLASS
    20         L, CLASS M OR CLASS N SERVICE AND HAS EIGHT OR MORE
    21         ELIGIBILITY POINTS AS DETERMINED PURSUANT TO SUBSECTION
    22         (A).
    23  § 5308.  ELIGIBILITY FOR ANNUITIES.
    24     * * *
    25     (B)  WITHDRAWAL ANNUITY.--ANY VESTEE OR ANY ACTIVE MEMBER OR
    26  INACTIVE MEMBER ON LEAVE WITHOUT PAY WHO TERMINATES STATE
    27  SERVICE HAVING [TEN] FIVE OR MORE ELIGIBILITY POINTS, OR WHO HAS
    28  CLASS G, CLASS H, CLASS I, CLASS J, CLASS K, CLASS L, CLASS M OR
    29  CLASS N SERVICE AND TERMINATES STATE SERVICE HAVING [EIGHT] FIVE
    30  OR MORE ELIGIBILITY POINTS, UPON COMPLIANCE WITH SECTION
    20010H0026B1905                 - 87 -

     1  5907(F), (G) OR (H) SHALL BE ENTITLED TO RECEIVE AN ANNUITY.
     2     * * *
     3  § 5309.  ELIGIBILITY FOR VESTING.
     4     ANY MEMBER WHO TERMINATES STATE SERVICE WITH [TEN] FIVE OR
     5  MORE ELIGIBILITY POINTS, OR ANY MEMBER WITH CLASS G, CLASS H,
     6  CLASS I, CLASS J, CLASS K, CLASS L, CLASS M OR CLASS N SERVICE
     7  WITH [EIGHT] FIVE OR MORE ELIGIBILITY POINTS, SHALL BE ELIGIBLE
     8  UNTIL ATTAINMENT OF SUPERANNUATION AGE TO VEST HIS RETIREMENT
     9  BENEFITS.
    10  § 5501.  REGULAR MEMBER CONTRIBUTIONS FOR CURRENT SERVICE.
    11     REGULAR MEMBER CONTRIBUTIONS SHALL BE MADE TO THE FUND ON
    12  BEHALF OF EACH ACTIVE MEMBER FOR CURRENT SERVICE EXCEPT FOR ANY
    13  PERIOD OF CURRENT SERVICE IN WHICH THE MAKING OF SUCH
    14  CONTRIBUTIONS HAS CEASED SOLELY BY REASON OF SECTION 5502.1
    15  (RELATING TO WAIVER OF REGULAR MEMBER CONTRIBUTIONS AND SOCIAL
    16  SECURITY INTEGRATION MEMBER CONTRIBUTIONS) OR ANY PROVISION OF
    17  THIS PART RELATING TO THE [ANNUAL COMPENSATION LIMIT UNDER IRC §
    18  401(A)(17)] LIMITATIONS UNDER IRC § 401(A)(17) OR 415(B).
    19  § 5502.  SOCIAL SECURITY INTEGRATION MEMBER CONTRIBUTIONS.
    20     [CONTRIBUTIONS] EXCEPT FOR ANY PERIOD OF CURRENT SERVICE IN
    21  WHICH THE MAKING OF REGULAR MEMBER CONTRIBUTIONS HAS CEASED
    22  SOLELY BY REASON OF SECTION 5502.1 (RELATING TO WAIVER OF
    23  REGULAR MEMBER CONTRIBUTIONS AND SOCIAL SECURITY INTEGRATION
    24  MEMBER CONTRIBUTIONS) OR ANY PROVISION OF THIS PART RELATING TO
    25  LIMITATIONS UNDER IRC § 401(A)(17) OR 415(B), CONTRIBUTIONS
    26  SHALL BE MADE ON BEHALF OF A MEMBER OF ANY CLASS WHO PRIOR TO
    27  MARCH 1, 1974, HAS ELECTED SOCIAL SECURITY INTEGRATION COVERAGE.
    28  THE AMOUNT OF SUCH CONTRIBUTIONS SHALL BE 6 1/4% OF THAT PORTION
    29  OF HIS COMPENSATION IN EXCESS OF THE MAXIMUM WAGES TAXABLE UNDER
    30  THE PROVISIONS OF THE SOCIAL SECURITY ACT (49 STAT. 620, 42
    20010H0026B1905                 - 88 -

     1  U.S.C. § 301 ET SEQ.), IN ADDITION TO THE REGULAR MEMBER
     2  CONTRIBUTIONS WHICH, AFTER SUCH ELECTION, SHALL BE DETERMINED ON
     3  THE BASIS OF THE BASIC CONTRIBUTION RATE OF 5% AND THE
     4  ADDITIONAL MEMBER CONTRIBUTION OF 1 1/4%: PROVIDED, THAT A
     5  MEMBER MAY ELECT TO DISCONTINUE SOCIAL SECURITY INTEGRATION
     6  COVERAGE AND SHALL THEREAFTER BE INELIGIBLE TO ACCRUE ANY
     7  FURTHER SOCIAL SECURITY INTEGRATION CREDITS OR ANY ADDITIONAL
     8  BENEFITS ON ACCOUNT OF SOCIAL SECURITY INTEGRATION MEMBERSHIP.
     9     SECTION 14.  TITLE 71 IS AMENDED BY ADDING A SECTION TO READ:
    10  § 5502.1.  WAIVER OF REGULAR MEMBER CONTRIBUTIONS AND SOCIAL
    11             SECURITY INTEGRATION MEMBER CONTRIBUTIONS.
    12     NOTWITHSTANDING THE PROVISIONS OF SECTIONS 5501 (RELATING TO
    13  REGULAR MEMBER CONTRIBUTIONS FOR CURRENT SERVICE) AND 5502
    14  (RELATING TO SOCIAL SECURITY INTEGRATION MEMBER CONTRIBUTIONS),
    15  NO REGULAR MEMBER CONTRIBUTIONS OR SOCIAL SECURITY INTEGRATION
    16  MEMBER CONTRIBUTIONS SHALL BE MADE BY AN ACTIVE MEMBER FOR THE
    17  PERIOD FROM JULY 1 TO THE FOLLOWING JUNE 30 IF THE MAXIMUM
    18  SINGLE LIFE ANNUITY TO WHICH THE MEMBER WOULD HAVE BEEN ENTITLED
    19  TO RECEIVE HAD THE MEMBER RETIRED WITH AN EFFECTIVE DATE OF
    20  RETIREMENT ON THE PRECEDING JANUARY 1 IS GREATER THAN 110% OF
    21  THE HIGHEST CALENDAR YEAR COMPENSATION OF THE MEMBER, PROVIDED
    22  THE MEMBER FILES A WRITTEN ELECTION AS PRESCRIBED BY THE BOARD.
    23     SECTION 15.  SECTIONS 5504(B), 5505(B), (C) AND (D), 5506,
    24  5507(B) AND 5508(B), (C), (E) AND (F) OF TITLE 71 ARE AMENDED TO
    25  READ:
    26  § 5504.  MEMBER CONTRIBUTIONS FOR THE PURCHASE OF CREDIT FOR
    27             PREVIOUS STATE SERVICE OR TO BECOME A FULL COVERAGE
    28             MEMBER.
    29     * * *
    30     (B)  CERTIFICATION AND METHOD OF PAYMENT.--THE AMOUNT PAYABLE
    20010H0026B1905                 - 89 -

     1  SHALL BE CERTIFIED IN EACH CASE BY THE BOARD IN ACCORDANCE WITH
     2  METHODS APPROVED BY THE ACTUARY AND SHALL BE PAID IN A LUMP SUM
     3  WITHIN 30 DAYS OR IN THE CASE OF AN ACTIVE MEMBER OR ELIGIBLE
     4  SCHOOL EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE PUBLIC SCHOOL
     5  EMPLOYEES' RETIREMENT SYSTEM MAY BE AMORTIZED WITH STATUTORY
     6  INTEREST THROUGH SALARY DEDUCTIONS IN AMOUNTS AGREED UPON BY THE
     7  MEMBER AND THE BOARD. THE SALARY DEDUCTION AMORTIZATION PLANS
     8  AGREED TO BY MEMBERS AND THE BOARD MAY INCLUDE A DEFERRAL OF
     9  PAYMENT AMOUNTS AND STATUTORY INTEREST UNTIL THE TERMINATION OF
    10  SCHOOL SERVICE OR STATE SERVICE, AS THE BOARD, IN ITS SOLE
    11  DISCRETION, DECIDES TO ALLOW. THE BOARD MAY LIMIT THE SALARY
    12  DEDUCTION AMORTIZATION PLANS TO SUCH TERMS AS THE BOARD, IN ITS
    13  SOLE DISCRETION, DETERMINES. IN THE CASE OF AN ELIGIBLE SCHOOL
    14  EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE PUBLIC SCHOOL EMPLOYEES'
    15  RETIREMENT SYSTEM, THE AGREED UPON SALARY DEDUCTIONS SHALL BE
    16  REMITTED TO THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD, WHICH
    17  SHALL CERTIFY AND TRANSFER TO THE BOARD THE AMOUNTS PAID.
    18  § 5505.  CONTRIBUTIONS FOR THE PURCHASE OF CREDIT FOR CREDITABLE
    19             NONSTATE SERVICE.
    20     * * *
    21     (B)  NONINTERVENING MILITARY SERVICE.--
    22         (1)  THE AMOUNT DUE FOR THE PURCHASE OF CREDIT FOR
    23     MILITARY SERVICE OTHER THAN INTERVENING MILITARY SERVICE
    24     SHALL BE DETERMINED BY APPLYING THE MEMBER'S BASIC
    25     CONTRIBUTION RATE, THE ADDITIONAL CONTRIBUTION RATE PLUS THE
    26     COMMONWEALTH NORMAL CONTRIBUTION RATE FOR ACTIVE MEMBERS AT
    27     THE TIME OF ENTRY, SUBSEQUENT TO SUCH MILITARY SERVICE, OF
    28     THE MEMBER INTO STATE SERVICE TO HIS AVERAGE ANNUAL RATE OF
    29     COMPENSATION OVER THE FIRST THREE YEARS OF SUCH SUBSEQUENT
    30     STATE SERVICE AND MULTIPLYING THE RESULT BY THE NUMBER OF
    20010H0026B1905                 - 90 -

     1     YEARS AND FRACTIONAL PART OF A YEAR OF CREDITABLE
     2     NONINTERVENING MILITARY SERVICE BEING PURCHASED TOGETHER WITH
     3     STATUTORY INTEREST DURING ALL PERIODS OF SUBSEQUENT STATE AND
     4     SCHOOL SERVICE TO DATE OF PURCHASE. UPON APPLICATION FOR
     5     CREDIT FOR SUCH SERVICE, PAYMENT SHALL BE MADE IN A LUMP SUM
     6     WITHIN 30 DAYS OR IN THE CASE OF AN ACTIVE MEMBER OR ELIGIBLE
     7     SCHOOL EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE PUBLIC SCHOOL
     8     EMPLOYEES' RETIREMENT SYSTEM IT MAY BE AMORTIZED WITH
     9     STATUTORY INTEREST THROUGH SALARY DEDUCTIONS IN AMOUNTS
    10     AGREED UPON BY THE MEMBER AND THE BOARD. THE SALARY DEDUCTION
    11     AMORTIZATION PLANS AGREED TO BY MEMBERS AND THE BOARD MAY
    12     INCLUDE A DEFERRAL OF PAYMENT AMOUNTS AND STATUTORY INTEREST
    13     UNTIL THE TERMINATION OF SCHOOL SERVICE OR STATE SERVICE, AS
    14     THE BOARD, IN ITS SOLE DISCRETION, DECIDES TO ALLOW. THE
    15     BOARD MAY LIMIT SALARY DEDUCTION AMORTIZATION PLANS TO SUCH
    16     TERMS AS THE BOARD, IN ITS SOLE DISCRETION, DETERMINES. IN
    17     THE CASE OF AN ELIGIBLE SCHOOL EMPLOYEE WHO IS AN ACTIVE
    18     MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM, THE
    19     AGREED UPON SALARY DEDUCTIONS SHALL BE REMITTED TO THE PUBLIC
    20     SCHOOL EMPLOYEES' RETIREMENT BOARD WHICH SHALL CERTIFY AND
    21     TRANSFER TO THE BOARD THE AMOUNTS PAID. APPLICATION MAY BE
    22     FILED FOR ALL SUCH MILITARY SERVICE CREDIT UPON COMPLETION OF
    23     THREE YEARS OF SUBSEQUENT STATE SERVICE AND SHALL BE CREDITED
    24     AS CLASS A SERVICE.
    25         (2)  APPLICANTS MAY PURCHASE CREDIT AS FOLLOWS:
    26             (I)  ONE PURCHASE OF THE TOTAL AMOUNT OF CREDITABLE
    27         NONINTERVENING MILITARY SERVICE; OR
    28             (II)  ONE PURCHASE PER 12-MONTH PERIOD OF A PORTION
    29         OF CREDITABLE NONINTERVENING MILITARY SERVICE.
    30     THE AMOUNT OF EACH PURCHASE SHALL BE NOT LESS THAN ONE YEAR
    20010H0026B1905                 - 91 -

     1     OF CREDITABLE NONINTERVENING MILITARY SERVICE. ANNUITY
     2     RESERVE ACCOUNT).
     3     (C)  INTERVENING MILITARY SERVICE.--CONTRIBUTIONS ON ACCOUNT
     4  OF CREDIT FOR INTERVENING MILITARY SERVICE SHALL BE DETERMINED
     5  BY THE MEMBER'S CONTRIBUTION RATE, THE ADDITIONAL CONTRIBUTION
     6  RATE WHICH SHALL BE APPLIED ONLY TO THOSE MEMBERS WHO BEGAN
     7  SERVICE ON OR AFTER THE EFFECTIVE DATE OF THIS AMENDATORY ACT
     8  AND COMPENSATION AT THE TIME OF ENTRY OF THE MEMBER INTO ACTIVE
     9  MILITARY SERVICE, TOGETHER WITH STATUTORY INTEREST DURING ALL
    10  PERIODS OF SUBSEQUENT STATE AND SCHOOL SERVICE TO DATE OF
    11  PURCHASE. UPON APPLICATION FOR SUCH CREDIT THE AMOUNT DUE SHALL
    12  BE CERTIFIED IN THE CASE OF EACH MEMBER BY THE BOARD IN
    13  ACCORDANCE WITH METHODS APPROVED BY THE ACTUARY, AND
    14  CONTRIBUTIONS MAY BE MADE BY:
    15         (1)  REGULAR MONTHLY PAYMENTS DURING ACTIVE MILITARY
    16     SERVICE; OR
    17         (2)  A LUMP SUM PAYMENT WITHIN 30 DAYS OF CERTIFICATION;
    18     OR
    19         (3)  SALARY DEDUCTIONS IN AMOUNTS AGREED UPON BY THE
    20     MEMBER OR ELIGIBLE SCHOOL EMPLOYEE WHO IS AN ACTIVE MEMBER OF
    21     THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM AND THE BOARD.
    22  THE SALARY DEDUCTION AMORTIZATION PLANS AGREED TO BY MEMBERS AND
    23  THE BOARD MAY INCLUDE A DEFERRAL OF PAYMENT AMOUNTS AND
    24  STATUTORY INTEREST UNTIL THE TERMINATION OF SCHOOL SERVICE OR
    25  STATE SERVICE, AS THE BOARD, IN ITS SOLE DISCRETION, DECIDES TO
    26  ALLOW. THE BOARD MAY LIMIT SALARY DEDUCTION AMORTIZATION PLANS
    27  TO SUCH TERMS AS THE BOARD, IN ITS SOLE DISCRETION, DETERMINES.
    28  IN THE CASE OF AN ELIGIBLE SCHOOL EMPLOYEE WHO IS AN ACTIVE
    29  MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM, THE
    30  AGREED UPON SALARY DEDUCTIONS SHALL BE REMITTED TO THE PUBLIC
    20010H0026B1905                 - 92 -

     1  SCHOOL EMPLOYEES' RETIREMENT BOARD, WHICH SHALL CERTIFY AND
     2  TRANSFER TO THE BOARD THE AMOUNTS PAID.
     3     (D)  NONMILITARY AND NONMAGISTERIAL SERVICE.--CONTRIBUTIONS
     4  ON ACCOUNT OF CREDIT FOR CREDITABLE NONSTATE SERVICE OTHER THAN
     5  MILITARY AND MAGISTERIAL SERVICE SHALL BE DETERMINED BY APPLYING
     6  THE MEMBER'S BASIC CONTRIBUTION RATE, THE ADDITIONAL
     7  CONTRIBUTION RATE PLUS THE COMMONWEALTH NORMAL CONTRIBUTION RATE
     8  FOR ACTIVE MEMBERS AT THE TIME OF ENTRY SUBSEQUENT TO SUCH
     9  CREDITABLE NONSTATE SERVICE OF THE MEMBER INTO STATE SERVICE TO
    10  HIS COMPENSATION AT THE TIME OF ENTRY INTO STATE SERVICE AND
    11  MULTIPLYING THE RESULT BY THE NUMBER OF YEARS AND FRACTIONAL
    12  PART OF A YEAR OF CREDITABLE NONSTATE SERVICE BEING PURCHASED
    13  TOGETHER WITH STATUTORY INTEREST DURING ALL PERIODS OF
    14  SUBSEQUENT STATE AND SCHOOL SERVICE TO THE DATE OF PURCHASE.
    15  UPON APPLICATION FOR CREDIT FOR SUCH SERVICE PAYMENT SHALL BE
    16  MADE IN A LUMP SUM WITHIN 30 DAYS OR IN THE CASE OF AN ACTIVE
    17  MEMBER OR ELIGIBLE SCHOOL EMPLOYEE WHO IS AN ACTIVE MEMBER OF
    18  THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM IT MAY BE
    19  AMORTIZED WITH STATUTORY INTEREST THROUGH SALARY DEDUCTIONS IN
    20  AMOUNTS AGREED UPON BY THE MEMBER AND THE BOARD. THE SALARY
    21  DEDUCTION AMORTIZATION PLANS AGREED TO BY MEMBERS AND THE BOARD
    22  MAY INCLUDE A DEFERRAL OF PAYMENT AMOUNTS AND STATUTORY INTEREST
    23  UNTIL THE TERMINATION OF SCHOOL SERVICE OR STATE SERVICE AS THE
    24  BOARD, IN ITS SOLE DISCRETION, DECIDES TO ALLOW. THE BOARD MAY
    25  LIMIT SALARY DEDUCTION AMORTIZATION PLANS TO SUCH TERMS AS THE
    26  BOARD, IN ITS SOLE DISCRETION, DETERMINES. IN THE CASE OF AN
    27  ELIGIBLE SCHOOL EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE PUBLIC
    28  SCHOOL EMPLOYEES' RETIREMENT SYSTEM, THE AGREED UPON SALARY
    29  DEDUCTION SHALL BE REMITTED TO THE PUBLIC SCHOOL EMPLOYEES'
    30  RETIREMENT BOARD, WHICH SHALL CERTIFY AND TRANSFER TO THE BOARD
    20010H0026B1905                 - 93 -

     1  THE AMOUNTS PAID.
     2     * * *
     3  § 5506.  INCOMPLETE PAYMENTS.
     4     IN THE EVENT THAT A MEMBER TERMINATES STATE SERVICE OR A
     5  MULTIPLE SERVICE MEMBER WHO IS AN ACTIVE MEMBER OF THE PUBLIC
     6  SCHOOL EMPLOYEES' RETIREMENT SYSTEM TERMINATES SCHOOL SERVICE
     7  BEFORE THE AGREED UPON PAYMENTS FOR CREDIT FOR PREVIOUS STATE
     8  SERVICE, CREDITABLE NONSTATE SERVICE, SOCIAL SECURITY
     9  INTEGRATION, [OR] FULL COVERAGE MEMBERSHIP OR RETURN OF BENEFITS
    10  ON ACCOUNT OF RETURNING TO STATE SERVICE OR ENTERING SCHOOL
    11  SERVICE AND ELECTING MULTIPLE SERVICE HAVE BEEN COMPLETED, THE
    12  MEMBER OR MULTIPLE SERVICE MEMBER WHO IS AN ACTIVE MEMBER OF THE
    13  PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM SHALL HAVE THE RIGHT
    14  TO PAY WITHIN 30 DAYS OF TERMINATION OF STATE SERVICE OR SCHOOL
    15  SERVICE THE BALANCE DUE, INCLUDING INTEREST, IN A LUMP SUM AND
    16  THE ANNUITY SHALL BE CALCULATED INCLUDING FULL CREDIT FOR THE
    17  PREVIOUS STATE SERVICE, CREDITABLE NONSTATE SERVICE, SOCIAL
    18  SECURITY INTEGRATION, OR FULL COVERAGE MEMBERSHIP. IN THE EVENT
    19  A MEMBER DOES NOT PAY THE BALANCE DUE WITHIN 30 DAYS OF
    20  TERMINATION OF STATE SERVICE OR IN THE EVENT A MEMBER DIES IN
    21  STATE SERVICE OR WITHIN 30 DAYS OF TERMINATION OF STATE SERVICE
    22  OR IN THE CASE OF A MULTIPLE SERVICE MEMBER WHO IS AN ACTIVE
    23  MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM, DOES
    24  NOT PAY THE BALANCE DUE WITHIN 30 DAYS OF TERMINATION OF SCHOOL
    25  SERVICE OR DIES IN SCHOOL SERVICE OR WITHIN 30 DAYS OF
    26  TERMINATION OF SCHOOL SERVICE AND BEFORE THE AGREED UPON
    27  PAYMENTS HAVE BEEN COMPLETED, THE PRESENT VALUE OF THE BENEFIT
    28  OTHERWISE PAYABLE SHALL BE REDUCED BY THE BALANCE DUE, INCLUDING
    29  INTEREST, AND THE BENEFIT PAYABLE SHALL BE CALCULATED AS THE
    30  ACTUARIAL EQUIVALENT OF SUCH REDUCED PRESENT VALUE.
    20010H0026B1905                 - 94 -

     1  § 5507.  CONTRIBUTIONS BY THE COMMONWEALTH AND OTHER EMPLOYERS.
     2     * * *
     3     (B)  CONTRIBUTIONS ON BEHALF OF ANNUITANTS.--THE COMMONWEALTH
     4  SHALL MAKE CONTRIBUTIONS ON BEHALF OF ANNUITANTS IN SUCH AMOUNTS
     5  AS SHALL BE CERTIFIED BY THE BOARD AS NECESSARY TO FUND THE
     6  LIABILITIES FOR SUPPLEMENTAL ANNUITIES IN ACCORDANCE WITH THE
     7  ACTUARIAL COST METHOD PROVIDED IN [SECTIONS] SECTION 5508(E)
     8  (RELATING TO ACTUARIAL COST METHOD)[, 5708.3(F) (RELATING TO
     9  SUPPLEMENTAL ANNUITIES COMMENCING 1994) AND 5708.5(F) (RELATING
    10  TO SUPPLEMENTAL ANNUITIES COMMENCING 1998)].
    11     * * *
    12  § 5508.  ACTUARIAL COST METHOD.
    13     * * *
    14     (B)  EMPLOYER NORMAL CONTRIBUTION RATE.--THE EMPLOYER NORMAL
    15  CONTRIBUTION RATE SHALL BE DETERMINED AFTER EACH ACTUARIAL
    16  VALUATION ON THE BASIS OF AN ANNUAL INTEREST RATE AND SUCH
    17  MORTALITY AND OTHER TABLES AS SHALL BE ADOPTED BY THE BOARD IN
    18  ACCORDANCE WITH GENERALLY ACCEPTED ACTUARIAL PRINCIPLES. THE
    19  EMPLOYER NORMAL CONTRIBUTION RATE SHALL BE DETERMINED AS A LEVEL
    20  PERCENTAGE OF THE COMPENSATION OF THE AVERAGE NEW ACTIVE MEMBER,
    21  WHICH PERCENTAGE, IF CONTRIBUTED ON THE BASIS OF HIS PROSPECTIVE
    22  COMPENSATION THROUGH HIS ENTIRE PERIOD OF ACTIVE STATE SERVICE,
    23  WOULD BE SUFFICIENT TO FUND THE LIABILITY FOR ANY PROSPECTIVE
    24  BENEFIT PAYABLE TO HIM, EXCEPT FOR THE SUPPLEMENTAL BENEFITS
    25  PROVIDED FOR IN SECTIONS 5708 (RELATING TO SUPPLEMENTAL
    26  ANNUITIES), 5708.1 (RELATING TO ADDITIONAL SUPPLEMENTAL
    27  ANNUITIES), 5708.2 (RELATING TO FURTHER ADDITIONAL SUPPLEMENTAL
    28  ANNUITIES) [AND], 5708.3 (RELATING TO SUPPLEMENTAL ANNUITIES
    29  COMMENCING 1994), 5708.4 (RELATING TO SPECIAL SUPPLEMENTAL
    30  POSTRETIREMENT ADJUSTMENT) AND 5708.5 (RELATING TO SUPPLEMENTAL
    20010H0026B1905                 - 95 -

     1  ANNUITIES COMMENCING 1998) IN EXCESS OF THAT PORTION FUNDED BY
     2  HIS PROSPECTIVE MEMBER CONTRIBUTIONS.
     3     (C)  ACCRUED LIABILITY CONTRIBUTION RATE.--FOR THE FISCAL
     4  YEAR BEGINNING JULY 1, [1991] 2002, THE ACCRUED LIABILITY
     5  CONTRIBUTION RATE SHALL BE COMPUTED AS THE RATE OF TOTAL
     6  COMPENSATION OF ALL ACTIVE MEMBERS WHICH SHALL BE CERTIFIED BY
     7  THE ACTUARY AS SUFFICIENT TO FUND OVER A PERIOD OF [20] 10 YEARS
     8  FROM JULY 1, [1991] 2002, THE PRESENT VALUE OF THE LIABILITIES
     9  FOR ALL PROSPECTIVE BENEFITS, EXCEPT FOR THE SUPPLEMENTAL
    10  BENEFITS AS PROVIDED IN SECTIONS 5708, 5708.1, 5708.2 [AND],
    11  5708.3, 5708.4 (RELATING TO SPECIAL SUPPLEMENTAL POSTRETIREMENT
    12  ADJUSTMENT) AND 5708.5 (RELATING TO SUPPLEMENTAL ANNUITIES
    13  COMMENCING 1998), IN EXCESS OF THE TOTAL ASSETS IN THE FUND
    14  (CALCULATED RECOGNIZING ALL INVESTMENT GAINS AND LOSSES OVER A
    15  FIVE-YEAR PERIOD), EXCLUDING THE BALANCE IN THE SUPPLEMENTAL
    16  ANNUITY ACCOUNT, AND THE PRESENT VALUE OF EMPLOYER NORMAL
    17  CONTRIBUTIONS AND OF MEMBER CONTRIBUTIONS PAYABLE WITH RESPECT
    18  TO ALL ACTIVE MEMBERS ON JULY 1, [1991,] 2002, AND EXCLUDING
    19  CONTRIBUTION TO BE TRANSFERRED BY COUNTY RETIREMENT SYSTEMS OR
    20  PENSION PLANS PURSUANT SECTION 5507(C). THE AMOUNT OF EACH
    21  ANNUAL ACCRUED LIABILITY CONTRIBUTION SHALL BE [5% GREATER THAN]
    22  EQUAL TO THE AMOUNT OF SUCH CONTRIBUTION FOR THE [PREVIOUS]
    23  FISCAL YEAR BEGINNING JULY 1, 2002, EXCEPT THAT, IF THE ACCRUED
    24  LIABILITY IS INCREASED BY LEGISLATION ENACTED SUBSEQUENT TO
    25  [JULY 1, 1991] JUNE 30, 2002, SUCH ADDITIONAL LIABILITY SHALL BE
    26  FUNDED OVER A PERIOD OF [20] 10 YEARS FROM THE FIRST DAY OF
    27  JULY, COINCIDENT WITH OR NEXT FOLLOWING THE EFFECTIVE DATE OF
    28  THE INCREASE[, PROVIDED THAT THE LIABILITY FOR ANY ADDITIONAL
    29  BENEFITS CREATED BY THIS ACT SHALL BE FUNDED OVER A PERIOD OF 20
    30  YEARS COMMENCING JULY 1, 1992]. THE AMOUNT OF EACH ANNUAL
    20010H0026B1905                 - 96 -

     1  ACCRUED LIABILITY CONTRIBUTION FOR SUCH ADDITIONAL LEGISLATIVE
     2  LIABILITIES SHALL BE [5% GREATER THAN] EQUAL TO THE AMOUNT OF
     3  SUCH CONTRIBUTION FOR THE [PREVIOUS FISCAL YEAR] FIRST ANNUAL
     4  PAYMENT.
     5     * * *
     6     (E)  SUPPLEMENTAL ANNUITY CONTRIBUTION RATE.--CONTRIBUTIONS
     7  FROM THE COMMONWEALTH REQUIRED TO PROVIDE FOR THE PAYMENT OF
     8  SUPPLEMENTAL ANNUITIES AS PROVIDED IN SECTIONS 5708, 5708.1
     9  [AND], 5708.2, 5708.3, 5708.4 AND 5708.5 SHALL BE PAID OVER A
    10  PERIOD OF [20] 10 YEARS FROM JULY 1, [1991] 2002. THE AMOUNT OF
    11  EACH ANNUAL SUPPLEMENTAL ANNUITIES CONTRIBUTION SHALL BE [5%
    12  GREATER THAN] EQUAL TO THE AMOUNT OF SUCH CONTRIBUTION FOR THE
    13  [PREVIOUS] FISCAL YEAR BEGINNING JULY 1, 2002. IN THE EVENT THAT
    14  SUPPLEMENTAL ANNUITIES ARE INCREASED BY LEGISLATION ENACTED
    15  SUBSEQUENT TO [JULY 1, 1991] JUNE 30, 2002, THE ADDITIONAL
    16  LIABILITY FOR THE INCREASE IN BENEFITS SHALL BE FUNDED IN EQUAL
    17  DOLLAR ANNUAL INSTALLMENTS [INCREASING BY 5% EACH YEAR] OVER A
    18  PERIOD OF [20] 10 YEARS FROM THE JULY FIRST, COINCIDENT WITH OR
    19  NEXT FOLLOWING THE EFFECTIVE DATE OF SUCH LEGISLATION.
    20  [NOTWITHSTANDING THE PRECEDING, THE FUNDING FOR THE SUPPLEMENTAL
    21  ANNUITIES COMMENCING 1994 PROVIDED FOR IN SECTION 5708.3 SHALL
    22  BE AS PROVIDED IN SECTION 5708.3(F).]
    23     (F)  EXPERIENCE ADJUSTMENT FACTOR.--FOR EACH YEAR AFTER THE
    24  ESTABLISHMENT OF THE ACCRUED LIABILITY CONTRIBUTION RATE FOR THE
    25  FISCAL YEAR BEGINNING JULY 1, [1991] 2002, ANY INCREASE OR
    26  DECREASE IN THE ACCRUED LIABILITY, INCLUDING LIABILITY FOR
    27  SUPPLEMENTAL ANNUITIES, DUE TO ACTUAL EXPERIENCE DIFFERING FROM
    28  ASSUMED EXPERIENCE, CHANGES IN ACTUARIAL ASSUMPTIONS, CHANGES IN
    29  THE TERMS AND CONDITIONS OF THE BENEFITS PROVIDED BY THE SYSTEM
    30  BY JUDICIAL, ADMINISTRATIVE OR OTHER PROCESSES OTHER THAN
    20010H0026B1905                 - 97 -

     1  LEGISLATION, INCLUDING, BUT NOT LIMITED TO, REINTERPRETATION OF
     2  THE PROVISIONS OF THIS PART, SHALL BE AMORTIZED IN EQUAL DOLLAR
     3  ANNUAL INSTALLMENTS [INCREASING BY 5% EACH YEAR] OVER A PERIOD
     4  OF [20] 10 YEARS BEGINNING WITH THE JULY 1 SUCCEEDING THE
     5  ACTUARIAL VALUATION.
     6     * * *
     7     SECTION 16.  SECTIONS 5702(A) AND (C) AND 5704(B) AND (F) OF
     8  TITLE 71 ARE AMENDED AND THE SECTIONS ARE AMENDED BY ADDING
     9  SUBSECTIONS TO READ:
    10  § 5702.  MAXIMUM SINGLE LIFE ANNUITY.
    11     (A)  GENERAL RULE.--ANY FULL COVERAGE MEMBER WHO IS ELIGIBLE
    12  TO RECEIVE AN ANNUITY PURSUANT TO THE PROVISIONS OF SECTION
    13  5308(A) OR (B) (RELATING TO ELIGIBILITY FOR ANNUITIES) WHO
    14  TERMINATES STATE SERVICE, OR IF A MULTIPLE SERVICE MEMBER WHO IS
    15  A SCHOOL EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE PUBLIC SCHOOL
    16  EMPLOYEES' RETIREMENT SYSTEM WHO TERMINATES SCHOOL SERVICE,
    17  BEFORE ATTAINING AGE 70 SHALL BE ENTITLED TO RECEIVE A MAXIMUM
    18  SINGLE LIFE ANNUITY ATTRIBUTABLE TO HIS CREDITED SERVICE AND
    19  EQUAL TO THE SUM OF THE FOLLOWING SINGLE LIFE ANNUITIES
    20  BEGINNING AT THE EFFECTIVE DATE OF RETIREMENT:
    21         (1)  A STANDARD SINGLE LIFE ANNUITY MULTIPLIED BY THE SUM
    22     OF THE PRODUCTS, DETERMINED SEPARATELY FOR EACH CLASS OF
    23     SERVICE, OBTAINED BY MULTIPLYING THE APPROPRIATE CLASS OF
    24     SERVICE MULTIPLIER BY THE RATIO OF YEARS OF SERVICE CREDITED
    25     IN THAT CLASS TO THE TOTAL CREDITED SERVICE. IN CASE THE
    26     MEMBER ON THE EFFECTIVE DATE OF RETIREMENT IS UNDER
    27     SUPERANNUATION AGE FOR ANY SERVICE, A REDUCTION FACTOR
    28     CALCULATED TO PROVIDE BENEFITS ACTUARIALLY EQUIVALENT TO AN
    29     ANNUITY STARTING AT SUPERANNUATION AGE SHALL BE APPLIED TO
    30     THE PRODUCT DETERMINED FOR THAT SERVICE. THE CLASS OF SERVICE
    20010H0026B1905                 - 98 -

     1     MULTIPLIER FOR ANY PERIOD OF CONCURRENT SERVICE SHALL BE
     2     MULTIPLIED BY THE PROPORTION OF TOTAL STATE AND SCHOOL
     3     COMPENSATION DURING SUCH PERIOD ATTRIBUTABLE TO STATE
     4     SERVICE. IN THE EVENT A MEMBER HAS TWO MULTIPLIERS FOR ONE
     5     CLASS OF SERVICE THE CLASS OF SERVICE MULTIPLIER TO BE USED
     6     FOR CALCULATING BENEFITS FOR THAT CLASS SHALL BE THE AVERAGE
     7     OF THE TWO MULTIPLIERS WEIGHTED BY THE PROPORTION OF
     8     COMPENSATION ATTRIBUTABLE TO EACH MULTIPLIER DURING THE THREE
     9     YEARS OF HIGHEST ANNUAL COMPENSATION IN THAT CLASS OF
    10     SERVICE: PROVIDED, THAT IN THE CASE OF A MEMBER OF CLASS E-1,
    11     A PORTION BUT NOT ALL OF WHOSE THREE YEARS OF HIGHEST ANNUAL
    12     JUDICIAL COMPENSATION IS PRIOR TO JANUARY 1, 1973, TWO CLASS
    13     OF SERVICE MULTIPLIERS SHALL BE CALCULATED ON THE BASIS OF
    14     HIS ENTIRE JUDICIAL SERVICE, THE ONE APPLYING THE JUDICIAL
    15     CLASS OF SERVICE MULTIPLIERS EFFECTIVE PRIOR TO JANUARY 1,
    16     1973 AND THE SECOND APPLYING THE CLASS OF SERVICE MULTIPLIERS
    17     EFFECTIVE SUBSEQUENT TO JANUARY 1, 1973. THE AVERAGE CLASS OF
    18     SERVICE MULTIPLIER TO BE USED FOR CALCULATING BENEFITS FOR
    19     HIS JUDICIAL SERVICE SHALL BE THE AVERAGE OF THE TWO
    20     CALCULATED MULTIPLIERS WEIGHTED BY THE PROPORTION OF
    21     COMPENSATION ATTRIBUTABLE TO EACH OF THE CALCULATED
    22     MULTIPLIERS DURING THE THREE YEARS OF HIGHEST ANNUAL
    23     COMPENSATION IN THAT CLASS OF SERVICE.
    24         (2)  IF ELIGIBLE, A SINGLE LIFE ANNUITY OF 2% OF HIS
    25     AVERAGE NONCOVERED SALARY FOR EACH YEAR OF SOCIAL SECURITY
    26     INTEGRATION CREDIT AS PROVIDED FOR IN SECTION 5305 (RELATING
    27     TO SOCIAL SECURITY INTEGRATION CREDITS) MULTIPLIED, IF ON THE
    28     EFFECTIVE DATE OF RETIREMENT THE MEMBER IS UNDER
    29     SUPERANNUATION AGE FOR ANY SERVICE, BY THE ACTUARIALLY
    30     DETERMINED REDUCTION FACTOR FOR THAT SERVICE.
    20010H0026B1905                 - 99 -

     1         (3)  IF ELIGIBLE, A SINGLE LIFE ANNUITY WHICH IS
     2     ACTUARIALLY EQUIVALENT TO THE REGULAR AND ADDITIONAL
     3     ACCUMULATED DEDUCTIONS ATTRIBUTABLE TO CONTRIBUTIONS AS A
     4     MEMBER OF CLASS C, BUT NOT LESS THAN SUCH ANNUITY DETERMINED
     5     AS IF THE MEMBER WERE AGE 60 ON THE EFFECTIVE DATE OF
     6     RETIREMENT, ACTUARIALLY REDUCED IN THE EVENT THE MEMBER IS
     7     UNDER SUPERANNUATION AGE ON THE EFFECTIVE DATE OF RETIREMENT.
     8         (4)  IF ELIGIBLE, A SINGLE LIFE ANNUITY WHICH IS
     9     ACTUARIALLY EQUIVALENT TO THE AMOUNT BY WHICH HIS REGULAR AND
    10     ADDITIONAL ACCUMULATED DEDUCTIONS ATTRIBUTABLE TO ANY
    11     CREDITED SERVICE OTHER THAN AS A MEMBER OF CLASS C ARE
    12     GREATER THAN ONE-HALF OF THE ACTUARIALLY EQUIVALENT VALUE ON
    13     THE EFFECTIVE DATE OF RETIREMENT OF THE ANNUITY AS PROVIDED
    14     IN PARAGRAPH (1) ATTRIBUTABLE TO SERVICE OTHER THAN CLASS C
    15     FOR WHICH REGULAR OR JOINT COVERAGE MEMBER CONTRIBUTIONS WERE
    16     MADE.
    17         (5)  IF ELIGIBLE, A SINGLE LIFE ANNUITY WHICH IS
    18     ACTUARIALLY EQUIVALENT TO THE AMOUNT BY WHICH HIS SOCIAL
    19     SECURITY INTEGRATION ACCUMULATED DEDUCTIONS ARE GREATER THAN
    20     ONE-HALF OF THE ACTUARIALLY EQUIVALENT VALUE ON THE EFFECTIVE
    21     DATE OF RETIREMENT OF THE ANNUITY PROVIDED FOR UNDER
    22     PARAGRAPH (2).
    23         (6)  IF ELIGIBLE, A SINGLE LIFE ANNUITY SUFFICIENT
    24     TOGETHER WITH THE ANNUITY PROVIDED FOR IN PARAGRAPH (1) AS A
    25     CLASS A AND CLASS AA MEMBER AND THE HIGHEST ANNUITY PROVIDED
    26     FOR IN PARAGRAPH (2) TO WHICH HE IS ENTITLED, OR AT HIS
    27     OPTION COULD HAVE BEEN ENTITLED, TO PRODUCE THAT PERCENTAGE
    28     OF A STANDARD SINGLE LIFE ANNUITY ON THE EFFECTIVE DATE OF
    29     RETIREMENT AS DETERMINED BY HIS TOTAL YEARS OF CREDITED
    30     SERVICE AS A MEMBER OF CLASS A AND CLASS AA AND BY THE
    20010H0026B1905                 - 100 -

     1     FOLLOWING TABLE:

     2           TOTAL YEARS OF                     PERCENTAGE OF
     3          CREDITED SERVICE                      STANDARD
     4          AS A MEMBER OF                       SINGLE LIFE
     5              CLASS A AND                        ANNUITY
     6              CLASS AA
     7                35-40                             100%
     8                41                                102%
     9                42                                104%
    10                43                                106%
    11                44                                108%
    12                45 OR MORE                        110%

    13     (A.1)  RULE FOR TERMINATIONS AFTER ATTAINING AGE 70.--
    14         (1)  ANY FULL COVERAGE MEMBER WHO IS ELIGIBLE TO RECEIVE
    15     AN ANNUITY PURSUANT TO THE PROVISIONS OF SECTION 5308(A) WHO
    16     TERMINATES STATE SERVICE, OR IF A MULTIPLE SERVICE MEMBER WHO
    17     IS A SCHOOL EMPLOYEE AND AN ACTIVE MEMBER OF THE PUBLIC
    18     SCHOOL EMPLOYEES' RETIREMENT SYSTEM WHO TERMINATES SCHOOL
    19     SERVICE, ON OR AFTER ATTAINING AGE 70 AND WHO APPLIES FOR A
    20     SUPERANNUATION ANNUITY TO BE EFFECTIVE THE DAY AFTER THE
    21     TERMINATION OF STATE SERVICE OR SCHOOL SERVICE, AS THE CASE
    22     MAY BE, SHALL BE ENTITLED TO RECEIVE A MAXIMUM SINGLE LIFE
    23     ANNUITY AS OF A DETERMINATION DATE THAT IS EQUAL TO THE
    24     GREATER OF SUBPARAGRAPH (I) OR (II):
    25             (I)  THE SUM OF THE ANNUITIES PROVIDED IN SUBSECTION
    26         (A)(1) THROUGH (6) CALCULATED AS OF THE DETERMINATION
    27         DATE; AND
    28             (II)  THE GREATER OF CLAUSE (A) OR (B):
    20010H0026B1905                 - 101 -

     1                 (A)  THE SUM OF THE ANNUITIES PROVIDED IN
     2             SUBSECTION (A)(1), (3), (4) AND (6) AS OF THE
     3             PRECEDING DETERMINATION DATE ADJUSTED BY THE
     4             ACTUARIAL INCREASE FACTOR, PLUS THE ANNUITIES
     5             PROVIDED IN SUBSECTION (A)(2) AND (5) AS OF THE
     6             DETERMINATION DATE; AND
     7                 (B)  THE MAXIMUM SINGLE LIFE ANNUITY AS OF THE
     8             PRECEDING DETERMINATION DATE ADJUSTED BY THE
     9             ACTUARIAL INCREASE FACTOR.
    10     THE MAXIMUM SINGLE LIFE ANNUITY SHALL BE CALCULATED FOR EACH
    11     DETERMINATION DATE.
    12         (2)  FOR PURPOSES OF THIS SUBSECTION, THE DETERMINATION
    13     DATE SHALL BE:
    14             (I)  THE MEMBER'S BIRTHDAY, PROVIDED THAT AS OF SUCH
    15         DATE THE MEMBER QUALIFIES FOR A MAXIMUM SINGLE LIFE
    16         ANNUITY UNDER THIS SUBSECTION; OR
    17             (II)  IF THE MEMBER'S MAXIMUM SINGLE LIFE ANNUITY IS
    18         BEING DETERMINED AS OF THE MEMBER'S EFFECTIVE DATE OF
    19         RETIREMENT, THEN THE DETERMINATION DATE SHALL BE THE
    20         MEMBER'S EFFECTIVE DATE OF RETIREMENT.
    21         (3)  IN THE EVENT AN ACTIVE MEMBER, AN INACTIVE MEMBER ON
    22     LEAVE WITHOUT PAY OR A MULTIPLE SERVICE MEMBER WHO IS A
    23     SCHOOL EMPLOYEE AND AN ACTIVE MEMBER OF THE PUBLIC SCHOOL
    24     EMPLOYEES' RETIREMENT SYSTEM HAS ATTAINED AGE 70 BEFORE THE
    25     EFFECTIVE DATE OF THIS SUBSECTION, OR ENTERS STATE SERVICE OR
    26     SCHOOL SERVICE, AS THE CASE MAY BE, AFTER ATTAINING AGE 70,
    27     THEN SECTION 5305.1 AND SUBSECTIONS (A) AND (A.1) SHALL BE
    28     EFFECTIVE PROSPECTIVELY WITH RESPECT TO SUCH MEMBER AT THE
    29     MEMBER'S NEXT BIRTHDAY AFTER THE EFFECTIVE DATE OF THIS
    30     SUBSECTION, ENTRY INTO STATE SERVICE, OR SCHOOL SERVICE.
    20010H0026B1905                 - 102 -

     1  NOTHING IN THIS SUBSECTION SHALL BE CONSTRUED TO PROVIDE AN
     2  ACTUARIAL INCREASE FACTOR FOR ANY PERIOD OF SERVICE PRIOR TO THE
     3  EFFECTIVE DATE OF THIS SUBSECTION.
     4     * * *
     5     (C)  LIMITATION ON AMOUNT OF ANNUITY.--THE ANNUITY PAID TO A
     6  MEMBER UNDER SUBSECTION (A) AND REDUCED IN ACCORDANCE WITH THE
     7  OPTION ELECTED UNDER SECTION 5705 (RELATING TO MEMBER'S OPTIONS)
     8  SHALL NOT EXCEED THE HIGHEST COMPENSATION RECEIVED DURING ANY
     9  PERIOD OF TWELVE CONSECUTIVE MONTHS OF CREDITED SERVICE[:
    10  PROVIDED, THAT THE PORTION OF ANY ANNUITY PAID TO A MEMBER ON
    11  ACCOUNT OF CLASS D-3 SERVICE UNDER SUBSECTION (A)(1) AND REDUCED
    12  IN ACCORDANCE WITH THE OPTION ELECTED UNDER SECTION 5705 SHALL
    13  NOT EXCEED THE GREATER OF $12,000 OR HIS HIGHEST ANNUAL
    14  COMPENSATION AS A MEMBER OF THE GENERAL ASSEMBLY]. NO LIMIT ON
    15  THE TOTAL ANNUITY PAID TO A MEMBER WITH CLASS D-3 SERVICE SHALL
    16  BE APPLIED IN THE CASE OF A MEMBER WHO SERVED AS A
    17  CONSTITUTIONAL OFFICER OF THE GENERAL ASSEMBLY [PRIOR TO JANUARY
    18  1, 1973].
    19     (D)  LIMITATION REGARDING ANNUAL BENEFIT UNDER IRC SECTION
    20  415.--NOTWITHSTANDING ANY PROVISION OF THIS PART TO THE
    21  CONTRARY, INCLUDING, BUT NOT LIMITED TO, SUBSECTION (C), NO
    22  BENEFIT SHALL BE PAYABLE TO THE EXTENT THAT SUCH BENEFIT EXCEEDS
    23  ANY LIMITATIONS UNDER IRC § 415(B) IN EFFECT WITH RESPECT TO
    24  GOVERNMENTAL PLANS AS SUCH TERM IS DEFINED IN IRC § 414(D) ON
    25  THE DATE THE BENEFIT PAYMENT BECOMES EFFECTIVE.
    26  § 5704.  DISABILITY ANNUITIES.
    27     * * *
    28     (B)  BENEFIT ATTRIBUTABLE TO SOCIAL SECURITY INTEGRATION
    29  CREDIT.--IF THE MEMBER HAS BEEN FOUND TO BE ELIGIBLE FOR A
    30  DISABILITY ANNUITY AND HAS SOCIAL SECURITY INTEGRATION CREDITS
    20010H0026B1905                 - 103 -

     1  AS PROVIDED IN SECTION 5305 (RELATING TO SOCIAL SECURITY
     2  INTEGRATION CREDITS), HE MAY ELECT TO WITHDRAW HIS SOCIAL
     3  SECURITY INTEGRATION ACCUMULATED DEDUCTIONS OR IF HE HAS [TEN]
     4  FIVE OR MORE ELIGIBILITY POINTS TO HIS CREDIT AND DOES NOT
     5  WITHDRAW HIS SOCIAL SECURITY INTEGRATION ACCUMULATED DEDUCTIONS
     6  HE MAY EXECUTE AN APPLICATION TO BE FILED WITH THE BOARD TO
     7  RECEIVE, IN ADDITION TO HIS DISABILITY ANNUITY, AN ANNUITY
     8  CALCULATED IN ACCORDANCE WITH SECTION 5702(A)(2).
     9     * * *
    10     (F)  SUPPLEMENT FOR SERVICE CONNECTED DISABILITY.--IF A
    11  MEMBER HAS BEEN FOUND TO BE ELIGIBLE FOR A DISABILITY ANNUITY
    12  AND IF THE DISABILITY HAS BEEN FOUND TO BE A SERVICE CONNECTED
    13  DISABILITY, SUCH MEMBER SHALL RECEIVE A SUPPLEMENT EQUAL TO 70%
    14  OF HIS FINAL AVERAGE SALARY LESS THE SUM OF THE ANNUITY AS
    15  DETERMINED UNDER SUBSECTION (A) AND ANY PAYMENTS PAID OR PAYABLE
    16  ON ACCOUNT OF SUCH DISABILITY UNDER THE ACT OF JUNE 2, 1915
    17  (P.L.736, NO.338), KNOWN AS ["THE PENNSYLVANIA WORKMEN'S
    18  COMPENSATION ACT"] THE WORKERS' COMPENSATION ACT, THE ACT OF
    19  JUNE 21, 1939 (P.L.566, NO.284), KNOWN AS ["]THE PENNSYLVANIA
    20  OCCUPATIONAL DISEASE ACT["] AND THE [FEDERAL] SOCIAL SECURITY
    21  ACT[, 42 U.S.C.A. § 301 ET SEQ.] (49 STAT. 620, 42 U.S.C. § 301
    22  ET SEQ.). SUCH SUPPLEMENT SHALL CONTINUE AS LONG AS HE IS
    23  DETERMINED TO BE DISABLED ON ACCOUNT OF HIS SERVICE CONNECTED
    24  DISABILITY IN ACCORDANCE WITH ["THE PENNSYLVANIA WORKMEN'S] THE
    25  WORKERS' COMPENSATION ACT["], OR ["]THE PENNSYLVANIA
    26  OCCUPATIONAL DISEASE ACT["].
    27     (G)  LIMITATION REGARDING ANNUAL BENEFIT UNDER IRC § 415.--
    28  NOTWITHSTANDING ANY PROVISIONS OF THIS PART TO THE CONTRARY, NO
    29  BENEFIT SHALL BE PAYABLE TO THE EXTENT THAT SUCH BENEFIT EXCEEDS
    30  ANY LIMITATION UNDER IRC § 415(B) AS IN EFFECT WITH RESPECT TO
    20010H0026B1905                 - 104 -

     1  GOVERNMENTAL PLANS, AS SUCH TERM IS DEFINED IN IRC § 414(D), ON
     2  THE DATE THE BENEFIT PAYMENT BECOMES EFFECTIVE.
     3     SECTION 17.  SECTION 5705(A) OF TITLE 71 IS AMENDED TO READ:
     4  § 5705.  MEMBER'S OPTIONS.
     5     (A)  GENERAL RULE.--ANY SPECIAL VESTEE WHO HAS ATTAINED
     6  SUPERANNUATION AGE, ANY VESTEE HAVING [TEN] FIVE OR MORE
     7  ELIGIBILITY POINTS, ANY MEMBER WITH CLASS G, CLASS H, CLASS I,
     8  CLASS J, CLASS K, CLASS L, CLASS M OR CLASS N SERVICE HAVING
     9  [EIGHT] FIVE OR MORE ELIGIBILITY POINTS OR ANY OTHER ELIGIBLE
    10  MEMBER UPON TERMINATION OF STATE SERVICE WHO HAS NOT WITHDRAWN
    11  HIS TOTAL ACCUMULATED DEDUCTIONS AS PROVIDED IN SECTION 5701
    12  (RELATING TO RETURN OF TOTAL ACCUMULATED DEDUCTIONS) MAY APPLY
    13  FOR AND ELECT TO RECEIVE EITHER A MAXIMUM SINGLE LIFE ANNUITY,
    14  AS CALCULATED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5702
    15  (RELATING TO MAXIMUM SINGLE LIFE ANNUITY), OR A REDUCED ANNUITY
    16  CERTIFIED BY THE ACTUARY TO BE ACTUARIALLY EQUIVALENT TO THE
    17  MAXIMUM SINGLE LIFE ANNUITY AND IN ACCORDANCE WITH ONE OF THE
    18  FOLLOWING OPTIONS; EXCEPT THAT NO MEMBER SHALL ELECT AN ANNUITY
    19  PAYABLE TO ONE OR MORE SURVIVOR ANNUITANTS OTHER THAN HIS SPOUSE
    20  OR ALTERNATE PAYEE OF SUCH A MAGNITUDE THAT THE PRESENT VALUE OF
    21  THE ANNUITY PAYABLE TO HIM FOR LIFE PLUS ANY LUMP SUM PAYMENT HE
    22  MAY HAVE ELECTED TO RECEIVE IS LESS THAN 50% OF THE PRESENT
    23  VALUE OF HIS MAXIMUM SINGLE LIFE ANNUITY:
    24         (1)  OPTION 1.--A LIFE ANNUITY TO THE MEMBER WITH A
    25     GUARANTEED TOTAL PAYMENT EQUAL TO THE PRESENT VALUE OF THE
    26     MAXIMUM SINGLE LIFE ANNUITY ON THE EFFECTIVE DATE OF
    27     RETIREMENT WITH THE PROVISION THAT, IF, AT HIS DEATH, HE HAS
    28     RECEIVED LESS THAN SUCH PRESENT VALUE, THE UNPAID BALANCE
    29     SHALL BE PAYABLE TO HIS BENEFICIARY.
    30         (2)  OPTION 2.--A JOINT AND SURVIVOR ANNUITY PAYABLE
    20010H0026B1905                 - 105 -

     1     DURING THE LIFETIME OF THE MEMBER WITH THE FULL AMOUNT OF
     2     SUCH ANNUITY PAYABLE THEREAFTER TO HIS SURVIVOR ANNUITANT, IF
     3     LIVING AT HIS DEATH.
     4         (3)  OPTION 3.--A JOINT AND FIFTY PERCENT (50%) SURVIVOR
     5     ANNUITY PAYABLE DURING THE LIFETIME OF THE MEMBER WITH ONE-
     6     HALF OF SUCH ANNUITY PAYABLE THEREAFTER TO HIS SURVIVOR
     7     ANNUITANT, IF LIVING AT HIS DEATH.
     8         (4)  OPTION 4.--SOME OTHER BENEFIT WHICH SHALL BE
     9     CERTIFIED BY THE ACTUARY TO BE ACTUARIALLY EQUIVALENT TO THE
    10     MAXIMUM SINGLE LIFE ANNUITY, SUBJECT TO THE FOLLOWING
    11     RESTRICTIONS:
    12             (I)  ANY ANNUITY SHALL BE PAYABLE WITHOUT REDUCTION
    13         DURING THE LIFETIME OF THE MEMBER;
    14             (II)  THE SUM OF ALL ANNUITIES PAYABLE TO THE
    15         DESIGNATED SURVIVOR ANNUITANTS SHALL NOT BE GREATER THAN
    16         ONE AND ONE-HALF TIMES THE ANNUITY PAYABLE TO THE MEMBER;
    17         AND
    18             (III)  A PORTION OF THE BENEFIT MAY BE PAYABLE AS A
    19         LUMP SUM, EXCEPT THAT SUCH LUMP SUM PAYMENT SHALL NOT
    20         EXCEED AN AMOUNT EQUAL TO THE TOTAL ACCUMULATED
    21         DEDUCTIONS STANDING TO THE CREDIT OF THE MEMBER. THE
    22         BALANCE OF THE PRESENT VALUE OF THE MAXIMUM SINGLE LIFE
    23         ANNUITY ADJUSTED IN ACCORDANCE WITH SECTION 5702(B) SHALL
    24         BE PAID IN THE FORM OF AN ANNUITY WITH A GUARANTEED TOTAL
    25         PAYMENT, A SINGLE LIFE ANNUITY, OR A JOINT AND SURVIVOR
    26         ANNUITY OR ANY COMBINATION THEREOF BUT SUBJECT TO THE
    27         RESTRICTIONS OF SUBPARAGRAPHS (I) AND (II) UNDER THIS
    28         OPTION.
    29     * * *
    30     SECTION 18.  SECTION 5706(A), (A.1) AND (C) OF TITLE 71 ARE
    20010H0026B1905                 - 106 -

     1  AMENDED AND THE SECTION IS AMENDED BY A ADDING A SUBSECTION TO
     2  READ:
     3  § 5706.  TERMINATION OF ANNUITIES.
     4     (A)  GENERAL RULE.--IF THE ANNUITANT RETURNS TO STATE SERVICE
     5  OR ENTERS OR HAS ENTERED SCHOOL SERVICE AND ELECTS MULTIPLE
     6  SERVICE MEMBERSHIP, ANY ANNUITY PAYABLE TO HIM UNDER THIS PART
     7  SHALL CEASE EFFECTIVE UPON THE DATE OF HIS RETURN TO STATE
     8  SERVICE OR ENTERING SCHOOL SERVICE AND IN THE CASE OF AN ANNUITY
     9  OTHER THAN A DISABILITY ANNUITY THE PRESENT VALUE OF SUCH
    10  ANNUITY, ADJUSTED FOR FULL COVERAGE IN THE CASE OF A JOINT
    11  COVERAGE MEMBER WHO MAKES THE APPROPRIATE BACK CONTRIBUTIONS FOR
    12  FULL COVERAGE, SHALL BE FROZEN AS OF THE DATE SUCH ANNUITY
    13  CEASES. AN ANNUITANT WHO IS CREDITED WITH AN ADDITIONAL 10% OF
    14  CLASS A AND CLASS C SERVICE AS PROVIDED IN SECTION 5302(C)
    15  (RELATING TO CREDITED STATE SERVICE) AND WHO RETURNS TO STATE
    16  SERVICE SHALL FORFEIT SUCH CREDITED SERVICE AND SHALL HAVE HIS
    17  FROZEN PRESENT VALUE ADJUSTED AS IF HIS 10% RETIREMENT INCENTIVE
    18  HAD NOT BEEN APPLIED TO HIS ACCOUNT. IN THE EVENT THAT THE COST-
    19  OF-LIVING INCREASE ENACTED DECEMBER 18, 1979 OCCURRED DURING THE
    20  PERIOD OF SUCH STATE OR SCHOOL EMPLOYMENT, THE FROZEN PRESENT
    21  VALUE SHALL BE INCREASED, ON OR AFTER THE MEMBER ATTAINS
    22  SUPERANNUATION AGE, BY THE PERCENT APPLICABLE HAD HE NOT
    23  RETURNED TO SERVICE. THIS SUBSECTION SHALL NOT APPLY IN THE CASE
    24  OF ANY ANNUITANT WHO MAY RENDER SERVICES TO THE COMMONWEALTH IN
    25  THE CAPACITY OF AN INDEPENDENT CONTRACTOR OR AS A MEMBER OF AN
    26  INDEPENDENT BOARD OR COMMISSION OR AS A MEMBER OF A DEPARTMENTAL
    27  ADMINISTRATIVE OR ADVISORY BOARD OR COMMISSION WHEN SUCH MEMBERS
    28  OF INDEPENDENT OR DEPARTMENTAL BOARDS OR COMMISSIONS ARE
    29  COMPENSATED ON A PER DIEM BASIS FOR NOT MORE THAN 150 DAYS PER
    30  CALENDAR YEAR[.] OR AS A MEMBER OF AN INDEPENDENT BOARD OR
    20010H0026B1905                 - 107 -

     1  COMMISSION REQUIRING APPOINTMENT BY THE GOVERNOR, WITH ADVICE
     2  AND CONSENT OF THE SENATE, WHERE THE ANNUAL SALARY PAYABLE TO
     3  THE MEMBER DOES NOT EXCEED $35,000 AND WHERE THE MEMBER HAS BEEN
     4  AN ANNUITANT FOR AT LEAST SIX MONTHS IMMEDIATELY PRECEDING THE
     5  APPOINTMENT. SUCH SERVICE SHALL NOT BE SUBJECT TO MEMBER
     6  CONTRIBUTIONS OR BE ELIGIBLE FOR QUALIFICATION AS CREDITABLE
     7  STATE SERVICE.
     8     (A.1)  RETURN TO STATE SERVICE DURING EMERGENCY.--WHEN, IN
     9  THE JUDGMENT OF THE EMPLOYER, AN EMERGENCY CREATES AN INCREASE
    10  IN THE WORK LOAD SUCH THAT THERE IS SERIOUS IMPAIRMENT OF
    11  SERVICE TO THE PUBLIC, AN ANNUITANT MAY BE RETURNED TO STATE
    12  SERVICE FOR A PERIOD NOT TO EXCEED 95 DAYS IN ANY [FISCAL]
    13  CALENDAR YEAR WITHOUT LOSS OF HIS ANNUITY. IN COMPUTING THE
    14  NUMBER OF DAYS AN ANNUITANT HAS RETURNED TO STATE SERVICE, ANY
    15  AMOUNT OF TIME LESS THAN ONE-HALF OF A DAY SHALL BE COUNTED AS
    16  ONE-HALF OF A DAY. FOR AGENCIES, BOARDS AND COMMISSIONS UNDER
    17  THE GOVERNOR'S JURISDICTION, THE APPROVAL OF THE GOVERNOR THAT
    18  AN EMERGENCY EXISTS SHALL BE REQUIRED BEFORE AN ANNUITANT MAY BE
    19  RETURNED TO STATE SERVICE.
    20     (A.2)  RETURN OF BENEFITS.--IN THE EVENT AN ANNUITANT WHOSE
    21  ANNUITY CEASES PURSUANT TO THIS SECTION RECEIVES ANY ANNUITY
    22  PAYMENT, INCLUDING A LUMP SUM PAYMENT PURSUANT TO SECTION 5705
    23  (RELATING TO MEMBER'S OPTIONS) ON OR AFTER THE DATE OF HIS
    24  RETURN TO STATE SERVICE OR ENTERING SCHOOL SERVICE, THE
    25  ANNUITANT SHALL RETURN TO THE BOARD THE AMOUNT SO RECEIVED PLUS
    26  STATUTORY INTEREST. THE AMOUNT PAYABLE SHALL BE CERTIFIED IN
    27  EACH CASE BY THE BOARD IN ACCORDANCE WITH METHODS APPROVED BY
    28  THE ACTUARY AND SHALL BE PAID IN A LUMP SUM WITHIN 30 DAYS OR IN
    29  THE CASE OF AN ACTIVE MEMBER OR SCHOOL EMPLOYEE WHO IS AN ACTIVE
    30  MEMBER OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM MAY BE
    20010H0026B1905                 - 108 -

     1  AMORTIZED WITH STATUTORY INTEREST THROUGH SALARY DEDUCTIONS IN
     2  AMOUNTS AGREED UPON BY THE MEMBER AND THE BOARD. IN THE CASE OF
     3  A SCHOOL EMPLOYEE WHO IS AN ACTIVE MEMBER OF THE PUBLIC SCHOOL
     4  EMPLOYEES' RETIREMENT SYSTEM, THE AGREED UPON SALARY DEDUCTIONS
     5  SHALL BE REMITTED TO THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT
     6  BOARD, WHICH SHALL CERTIFY AND TRANSFER TO THE BOARD THE AMOUNTS
     7  PAID.
     8     * * *
     9     (C)  ELIMINATION OF THE EFFECT OF FROZEN PRESENT VALUE.--
    10         (1)  AN ANNUITANT WHO RETURNS TO STATE SERVICE AND EARNS
    11     THREE ELIGIBILITY POINTS BY PERFORMING CREDITED STATE SERVICE
    12     FOLLOWING THE MOST RECENT PERIOD OF RECEIPT OF AN ANNUITY
    13     UNDER THIS PART, OR AN ANNUITANT WHO ENTERS SCHOOL SERVICE
    14     AND:
    15             (I)  IS A MULTIPLE SERVICE MEMBER; OR
    16             (II)  WHO ELECTS MULTIPLE SERVICE MEMBERSHIP, AND
    17     EARNS THREE ELIGIBILITY POINTS BY PERFORMING CREDITED STATE
    18     SERVICE OR CREDITED SCHOOL SERVICE FOLLOWING THE MOST RECENT
    19     PERIOD OF RECEIPT OF AN ANNUITY UNDER THIS PART, AND WHO HAD
    20     THE PRESENT VALUE OF HIS ANNUITY FROZEN IN ACCORDANCE WITH
    21     SUBSECTION (A), SHALL QUALIFY TO HAVE THE EFFECT OF THE
    22     FROZEN PRESENT VALUE RESULTING FROM ALL PREVIOUS PERIODS OF
    23     RETIREMENT ELIMINATED, PROVIDED THAT ALL PAYMENTS UNDER
    24     OPTION 4 AND ANNUITY PAYMENTS PAYABLE DURING PREVIOUS PERIODS
    25     OF RETIREMENT PLUS INTEREST AS SET FORTH IN PARAGRAPH (3)
    26     SHALL BE RETURNED TO THE FUND IN THE FORM OF AN ACTUARIAL
    27     ADJUSTMENT TO HIS SUBSEQUENT BENEFITS OR IN SUCH FORM AS THE
    28     BOARD MAY OTHERWISE DIRECT.
    29         (2)  UPON SUBSEQUENT DISCONTINUANCE OF SERVICE AND THE
    30     FILING OF AN APPLICATION FOR AN ANNUITY, A FORMER ANNUITANT
    20010H0026B1905                 - 109 -

     1     WHO QUALIFIES TO HAVE THE EFFECT OF A FROZEN PRESENT VALUE
     2     ELIMINATED UNDER THIS SUBSECTION SHALL BE ENTITLED TO RECEIVE
     3     THE HIGHER OF EITHER:
     4             (I)  AN ANNUITY (PRIOR TO OPTIONAL MODIFICATION)
     5         CALCULATED AS IF THE FREEZING OF THE FORMER ANNUITANT'S
     6         ACCOUNT PURSUANT TO SUBSECTION (A) HAD NOT OCCURRED,
     7         ADJUSTED BY CREDITING CLASS A STATE SERVICE AS CLASS AA
     8         SERVICE AS PROVIDED FOR IN SECTION 5306(A.1) (RELATING TO
     9         CLASSES OF SERVICE) AND FURTHER ADJUSTED ACCORDING TO
    10         PARAGRAPH (3), PROVIDED THAT A FORMER ANNUITANT OF THE
    11         SYSTEM OR A FORMER ANNUITANT OF THE PUBLIC SCHOOL
    12         EMPLOYEES' RETIREMENT SYSTEM WHO RETIRED UNDER A
    13         PROVISION OF LAW GRANTING ADDITIONAL SERVICE CREDIT IF
    14         TERMINATION OF STATE OR SCHOOL SERVICE OR RETIREMENT
    15         OCCURRED DURING A SPECIFIC PERIOD OF TIME SHALL NOT BE
    16         PERMITTED TO RETAIN THE ADDITIONAL SERVICE CREDIT UNDER
    17         THE PRIOR LAW WHEN THE ANNUITY IS COMPUTED FOR HIS MOST
    18         RECENT RETIREMENT; OR
    19             (II)  AN ANNUITY (PRIOR TO OPTIONAL MODIFICATION)
    20         CALCULATED AS IF THE FORMER ANNUITANT DID NOT QUALIFY TO
    21         HAVE THE EFFECT OF THE FROZEN PRESENT VALUE ELIMINATED,
    22     UNLESS THE FORMER ANNUITANT NOTIFIES THE BOARD IN WRITING BY
    23     THE LATER OF THE DATE THE APPLICATION FOR ANNUITY IS FILED OR
    24     THE EFFECTIVE DATE OF RETIREMENT THAT THE FORMER ANNUITANT
    25     WISHES TO RECEIVE THE LOWER ANNUITY.
    26         (3)  IN ADDITION TO ANY OTHER ADJUSTMENT TO THE PRESENT
    27     VALUE OF THE MAXIMUM SINGLE LIFE ANNUITY THAT A MEMBER MAY BE
    28     ENTITLED TO RECEIVE THAT OCCURS AS A RESULT OF ANY OTHER
    29     PROVISION OF LAW, THE PRESENT VALUE OF THE MAXIMUM SINGLE
    30     LIFE ANNUITY SHALL BE REDUCED BY ALL AMOUNTS PAID OR PAYABLE
    20010H0026B1905                 - 110 -

     1     TO HIM DURING ALL PREVIOUS PERIODS OF RETIREMENT PLUS
     2     INTEREST ON THESE AMOUNTS UNTIL THE DATE OF SUBSEQUENT
     3     RETIREMENT. THE INTEREST FOR EACH YEAR SHALL BE CALCULATED
     4     BASED UPON THE ANNUAL INTEREST RATE ADOPTED FOR THAT FISCAL
     5     YEAR BY THE BOARD FOR THE CALCULATION OF THE NORMAL
     6     CONTRIBUTION RATE PURSUANT TO SECTION 5508(B) (RELATING TO
     7     ACTUARIAL COST METHOD).
     8     SECTION 18.1.  SECTION 5707 OF TITLE 71 IS AMENDED BY ADDING
     9  A SUBSECTION TO READ:
    10  § 5707.  DEATH BENEFITS.
    11     * * *
    12     (F)  MEMBERS SUBJECT TO LIMITATIONS UNDER SECTION 5702(C).--
    13  SUBJECT TO THE LIMITATIONS CONTAINED IN SECTION 401(A)(9) OF THE
    14  INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. §
    15  401(A)(9)) THE PRESENT VALUE OF ANY ANNUITY IN EXCESS OF THAT
    16  PAYABLE UNDER SECTION 5702 (RELATING TO MAXIMUM SINGLE LIFE
    17  ANNUITY) THAT IS NOT SUBJECT TO THE LIMITATIONS UNDER SECTION
    18  415(B) OF THE INTERNAL REVENUE CODE OF 1986 SHALL BE PAID IN A
    19  LUMP SUM TO THE BENEFICIARY DESIGNATED BY THE MEMBER AFTER THE
    20  DEATH OF THE MEMBER. A BENEFICIARY RECEIVING A BENEFIT UNDER
    21  THIS SUBSECTION SHALL NOT BE ABLE TO ELECT A PAYMENT METHOD
    22  OTHERWISE ALLOWED UNDER SECTION 5709(B)(2) AND (3) (RELATING TO
    23  PAYMENT OF BENEFITS).
    24     SECTION 19.  SECTIONS 5708.1(F), 5708.2(F), 5708.3(F),
    25  5708.5(F), 5901(A) AND (B), 5902(L), 5903(A) AND 5904(B) OF
    26  TITLE 71 ARE AMENDED TO READ:
    27  § 5708.1.  ADDITIONAL SUPPLEMENTAL ANNUITIES.
    28     * * *
    29     (F)  FUNDING.--THE ACTUARY SHALL ANNUALLY CERTIFY THE AMOUNT
    30  OF APPROPRIATIONS FOR THE NEXT FISCAL YEAR NEEDED TO FUND, OVER
    20010H0026B1905                 - 111 -

     1  A PERIOD OF [20] TEN YEARS FROM JULY 1, [1991] 2002, THE
     2  ADDITIONAL MONTHLY SUPPLEMENTAL ANNUITY PROVIDED FOR IN THIS
     3  SECTION. THE BOARD SHALL SUBMIT THE ACTUARY'S CERTIFICATION TO
     4  THE SECRETARY OF THE BUDGET ON OR BEFORE NOVEMBER 1 OF EACH
     5  YEAR. IF, IN ANY YEAR AFTER 1984, THE AMOUNT CERTIFIED IS
     6  DISAPPROVED UNDER SECTION 610 OF THE ACT OF APRIL 9, 1929
     7  (P.L.177, NO.175), KNOWN AS THE ADMINISTRATIVE CODE OF 1929, AS
     8  INSUFFICIENT TO MEET THE FUNDING REQUIREMENTS OF THIS SUBSECTION
     9  OR IS NOT APPROPRIATED ON OR BEFORE JULY 1, THE ADDITIONAL
    10  SUPPLEMENTAL ANNUITY PROVIDED FOR IN THIS SECTION SHALL BE
    11  SUSPENDED UNTIL SUCH TIME AS AN AMOUNT CERTIFIED AND APPROVED AS
    12  SUFFICIENT IS APPROPRIATED.
    13     * * *
    14  § 5708.2.  FURTHER ADDITIONAL SUPPLEMENTAL ANNUITIES.
    15     * * *
    16     (F)  FUNDING.--THE ACTUARY SHALL ANNUALLY ESTIMATE THE AMOUNT
    17  OF COMMONWEALTH APPROPRIATIONS FOR THE NEXT FISCAL YEAR NEEDED
    18  TO FUND, OVER A PERIOD OF [20] TEN YEARS FROM JULY 1, [1991]
    19  2002, THE ADDITIONAL MONTHLY SUPPLEMENTAL ANNUITY PROVIDED FOR
    20  IN THIS SECTION. THE BOARD SHALL SUBMIT THE ACTUARY'S ESTIMATION
    21  TO THE SECRETARY OF THE BUDGET ON OR BEFORE NOVEMBER 1 OF EACH
    22  YEAR. IF, IN ANY YEAR AFTER 1988, THE AMOUNT ESTIMATED IS
    23  DISAPPROVED UNDER SECTION 610 OF THE ACT OF APRIL 9, 1929
    24  (P.L.177, NO.175), KNOWN AS THE ADMINISTRATIVE CODE OF 1929, AS
    25  INSUFFICIENT TO MEET THE FUNDING REQUIREMENTS OF THIS SUBSECTION
    26  OR IS NOT APPROPRIATED ON OR BEFORE JULY 1, THE ADDITIONAL
    27  SUPPLEMENTAL ANNUITY PROVIDED FOR IN THIS SECTION SHALL BE
    28  SUSPENDED UNTIL SUCH TIME AS AN AMOUNT CERTIFIED AND APPROVED AS
    29  SUFFICIENT IS APPROPRIATED.
    30     * * *
    20010H0026B1905                 - 112 -

     1  § 5708.3.  SUPPLEMENTAL ANNUITIES COMMENCING 1994.
     2     * * *
     3     (F)  FUNDING.--[NOTWITHSTANDING SECTION 5508(E) (RELATING TO
     4  ACTUARIAL COST METHOD), THE] THE ADDITIONAL LIABILITY FOR THE
     5  INCREASE IN BENEFITS PROVIDED IN THIS SECTION SHALL BE FUNDED IN
     6  EQUAL DOLLAR ANNUAL INSTALLMENTS [INCREASING BY 5% EACH YEAR]
     7  OVER A PERIOD OF [20] TEN YEARS BEGINNING JULY 1, [1995] 2002.
     8     * * *
     9  § 5708.5.  SUPPLEMENTAL ANNUITIES COMMENCING 1998.
    10     * * *
    11     (F)  FUNDING.--[NOTWITHSTANDING SECTION 5508(E) (RELATING TO
    12  ACTUARIAL COST METHOD), THE] THE ADDITIONAL LIABILITY FOR THE
    13  INCREASE IN BENEFITS PROVIDED IN THIS SECTION SHALL BE FUNDED IN
    14  EQUAL DOLLAR ANNUAL INSTALLMENTS [INCREASING BY 5% EACH YEAR]
    15  OVER A PERIOD OF [20] TEN YEARS BEGINNING JULY 1, [1998] 2002.
    16     * * *
    17  § 5901.  THE STATE EMPLOYEES' RETIREMENT BOARD.
    18     (A)  STATUS AND MEMBERSHIP.--THE BOARD SHALL BE AN
    19  INDEPENDENT ADMINISTRATIVE BOARD AND CONSIST OF 11 MEMBERS: THE
    20  STATE TREASURER, EX OFFICIO, TWO SENATORS [OR FORMER SENATORS],
    21  TWO MEMBERS [OR FORMER MEMBERS] OF THE HOUSE OF REPRESENTATIVES
    22  AND SIX MEMBERS APPOINTED BY THE GOVERNOR, ONE OF WHOM SHALL BE
    23  AN ANNUITANT OF THE SYSTEM, FOR TERMS OF FOUR YEARS, SUBJECT TO
    24  CONFIRMATION BY THE SENATE. AT LEAST FIVE BOARD MEMBERS SHALL BE
    25  ACTIVE MEMBERS OF THE SYSTEM, AND AT LEAST TWO SHALL HAVE TEN OR
    26  MORE YEARS OF CREDITED STATE SERVICE. THE CHAIRMAN OF THE BOARD
    27  SHALL BE DESIGNATED BY THE GOVERNOR FROM AMONG THE MEMBERS OF
    28  THE BOARD. EACH MEMBER OF THE BOARD WHO IS A MEMBER OF THE
    29  GENERAL ASSEMBLY MAY APPOINT A DULY AUTHORIZED DESIGNEE TO ACT
    30  IN HIS STEAD.
    20010H0026B1905                 - 113 -

     1     (B)  APPOINTMENTS AND TERMS.--THE TWO MEMBERS ELECTED BY THE
     2  BOARD AND SERVING ON THE EFFECTIVE DATE OF THIS TITLE SHALL
     3  CONTINUE TO SERVE UNTIL THE EXPIRATION OF THEIR RESPECTIVE
     4  TERMS. THE MEMBERS [OR FORMER MEMBERS] OF THE SENATE SHALL BE
     5  APPOINTED BY THE PRESIDENT PRO TEMPORE OF THE SENATE AND SHALL
     6  CONSIST OF A MAJORITY AND A MINORITY MEMBER [OR FORMER MEMBER].
     7  THE MEMBERS [OR FORMER MEMBERS] OF THE HOUSE OF REPRESENTATIVES
     8  SHALL BE APPOINTED BY THE SPEAKER OF THE HOUSE OF
     9  REPRESENTATIVES AND SHALL CONSIST OF A MAJORITY AND A MINORITY
    10  MEMBER [OR FORMER MEMBER]. THE LEGISLATIVE MEMBERS SHALL SERVE
    11  ON THE BOARD FOR THE DURATION OF [THE TERMS FOR WHICH THEY WERE
    12  ELECTED AND FORMER LEGISLATIVE MEMBERS SHALL SERVE A TERM OF TWO
    13  YEARS.] THEIR LEGISLATIVE TERMS AND SHALL CONTINUE TO SERVE
    14  UNTIL 30 DAYS AFTER THE CONVENING OF THE NEXT REGULAR SESSION OF
    15  THE GENERAL ASSEMBLY AFTER THE EXPIRATION OF THEIR RESPECTIVE
    16  LEGISLATIVE TERMS, OR UNTIL A SUCCESSOR IS APPOINTED FOR THE NEW
    17  TERM, WHICHEVER OCCURS FIRST. OF THE REMAINING FOUR APPOINTEES,
    18  ONE SHALL BE APPOINTED FOR AN INITIAL TERM OF TWO YEARS, ONE FOR
    19  AN INITIAL TERM OF THREE YEARS, AND TWO FOR AN INITIAL TERM OF
    20  FOUR YEARS. A VACANCY OCCURRING DURING THE TERM OF AN APPOINTED
    21  MEMBER SHALL BE FILLED FOR THE UNEXPIRED TERM BY THE APPOINTMENT
    22  AND CONFIRMATION OF A SUCCESSOR IN THE SAME MANNER AS HIS
    23  PREDECESSOR.
    24     * * *
    25  § 5902.  ADMINISTRATIVE DUTIES OF THE BOARD.
    26     * * *
    27     (L)  MEMBER CONTRIBUTIONS.--THE BOARD SHALL CAUSE ALL PICKUP
    28  CONTRIBUTIONS MADE ON BEHALF OF A MEMBER TO BE CREDITED TO THE
    29  ACCOUNT OF THE MEMBER AND CREDIT TO HIS ACCOUNT ANY OTHER
    30  PAYMENT MADE BY SUCH MEMBER, INCLUDING, BUT NOT LIMITED TO,
    20010H0026B1905                 - 114 -

     1  AMOUNTS COLLECTED BY THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT
     2  SYSTEM FOR THE REINSTATEMENT OF PREVIOUS STATE SERVICE OR
     3  CREDITABLE NONSTATE SERVICE, AND AMOUNTS PAID TO RETURN BENEFITS
     4  PAID AFTER THE DATE OF RETURN TO STATE SERVICE OR ENTERING
     5  SCHOOL SERVICE REPRESENTING LUMP SUM PAYMENTS MADE PURSUANT TO
     6  SECTION 5705(A)(4)(III) (RELATING TO MEMBER'S OPTIONS) AND
     7  MEMBER'S ANNUITY PAYMENTS, BUT NOT INCLUDING OTHER BENEFITS
     8  RETURNED PURSUANT TO SECTION 5706(A.2) (RELATING TO TERMINATION
     9  OF ANNUITIES) AND SHALL PAY ALL SUCH AMOUNTS INTO THE FUND.
    10     * * *
    11  § 5903.  DUTIES OF THE BOARD TO ADVISE AND REPORT TO HEADS OF
    12             DEPARTMENTS AND MEMBERS.
    13     (A)  MANUAL OF REGULATIONS.--THE BOARD SHALL, WITH THE ADVICE
    14  OF THE ATTORNEY GENERAL AND THE ACTUARY, PREPARE AND PROVIDE,
    15  WITHIN 90 DAYS OF THE EFFECTIVE DATE OF THIS PART, A MANUAL
    16  INCORPORATING RULES AND REGULATIONS CONSISTENT WITH THE
    17  PROVISIONS OF THIS PART TO THE HEADS OF DEPARTMENTS WHO SHALL
    18  MAKE THE INFORMATION CONTAINED THEREIN AVAILABLE TO THE GENERAL
    19  MEMBERSHIP. THE BOARD SHALL THEREAFTER ADVISE THE HEADS OF
    20  DEPARTMENTS WITHIN 90 DAYS OF ANY CHANGES IN SUCH RULES AND
    21  REGULATIONS DUE TO CHANGES IN THE LAW OR DUE TO CHANGES IN
    22  ADMINISTRATIVE POLICIES. AS SOON AS PRACTICABLE AFTER THE
    23  COMMISSIONER'S ANNOUNCEMENT WITH RESPECT THERETO, THE BOARD
    24  SHALL ALSO ADVISE THE HEADS OF DEPARTMENTS AS TO ANY COST-OF-
    25  LIVING ADJUSTMENT FOR THE SUCCEEDING CALENDAR YEAR IN THE AMOUNT
    26  OF THE LIMITATION UNDER IRC § 401(A)(17)[.] AND THE DOLLAR
    27  AMOUNTS OF THE LIMITATIONS UNDER IRC § 415(B). AS SOON AS
    28  PRACTICABLE AFTER JANUARY 1 OF EACH YEAR, THE BOARD SHALL ALSO
    29  ADVISE THE HEADS OF DEPARTMENTS OF THE EMPLOYEES FOR WHOM,
    30  PURSUANT TO SECTION 5502.1 (RELATING TO WAIVER OF REGULAR MEMBER
    20010H0026B1905                 - 115 -

     1  CONTRIBUTIONS AND SOCIAL SECURITY INTEGRATION MEMBER
     2  CONTRIBUTIONS), PICKUP CONTRIBUTIONS ARE NOT TO BE MADE.
     3     * * *
     4  § 5904.  DUTIES OF THE BOARD TO REPORT TO THE PUBLIC SCHOOL
     5             EMPLOYEES' RETIREMENT BOARD.
     6     * * *
     7     (B)  MULTIPLE SERVICE MEMBERSHIP OF SCHOOL EMPLOYEES.--UPON
     8  RECEIPT OF NOTIFICATION FROM THE PUBLIC SCHOOL EMPLOYEES'
     9  RETIREMENT BOARD THAT A FORMER STATE EMPLOYEE HAS BECOME AN
    10  ACTIVE MEMBER IN THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM
    11  AND HAS ELECTED TO RECEIVE CREDIT FOR MULTIPLE SERVICE, THE
    12  BOARD SHALL CERTIFY TO THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT
    13  BOARD AND CONCURRENTLY TO THE MEMBER:
    14         (1)  THE TOTAL CREDITED SERVICE IN THE SYSTEM AND THE
    15     NUMBER OF YEARS AND FRACTIONAL PART OF A YEAR OF SERVICE
    16     CREDITED IN EACH CLASS OF SERVICE;
    17         (2)  THE ANNUAL COMPENSATION RECEIVED EACH CALENDAR YEAR
    18     BY THE MEMBER FOR CREDITED STATE SERVICE; [AND]
    19         (3)  THE SOCIAL SECURITY INTEGRATION CREDITED SERVICE TO
    20     WHICH THE MEMBER IS ENTITLED AND THE AVERAGE NONCOVERED
    21     SALARY UPON WHICH THE SINGLE LIFE ANNUITY ATTRIBUTABLE TO
    22     SUCH SERVICE WILL BE COMPUTED[.]; AND
    23         (4)  THE AMOUNT OF THE DEDUCTIONS AND THE PERIOD OVER
    24     WHICH THEY ARE TO BE MADE, IF THE MEMBER HAS ELECTED PAYROLL
    25     DEDUCTIONS PURSUANT TO SECTION 5504 (RELATING TO MEMBER
    26     CONTRIBUTIONS FOR THE PURCHASE OF CREDIT FOR PREVIOUS STATE
    27     SERVICE OR TO BECOME A FULL COVERAGE MEMBER) OR 5505
    28     (RELATING TO CONTRIBUTIONS FOR THE PURCHASE OF CREDIT FOR
    29     CREDITABLE NONSTATE SERVICE).
    30     * * *
    20010H0026B1905                 - 116 -

     1     SECTION 20.  SECTION 5905(B) OF TITLE 71 IS AMENDED AND THE
     2  SECTION IS AMENDED BY ADDING A SUBSECTION TO READ:
     3  § 5905.  DUTIES OF THE BOARD REGARDING APPLICATIONS AND
     4             ELECTIONS OF MEMBERS.
     5     * * *
     6     (B)  SCHOOL EMPLOYEES ELECTING MULTIPLE SERVICE STATUS.--UPON
     7  RECEIPT OF NOTIFICATION FROM THE PUBLIC SCHOOL EMPLOYEES'
     8  RETIREMENT BOARD THAT A FORMER STATE EMPLOYEE HAS BECOME AN
     9  ACTIVE MEMBER IN THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM
    10  AND HAS ELECTED TO BECOME A MEMBER WITH MULTIPLE SERVICE STATUS
    11  THE BOARD SHALL:
    12         (1)  IN CASE OF A MEMBER RECEIVING AN ANNUITY FROM THE
    13     SYSTEM[, DISCONTINUE]:
    14             (I)  DISCONTINUE PAYMENTS, TRANSFER THE PRESENT
    15         VALUE[, AT THAT TIME,] OF THE MEMBER'S ANNUITY AT THE
    16         TIME OF ENTERING SCHOOL SERVICE, PLUS THE AMOUNT
    17         WITHDRAWN IN A LUMP SUM PAYMENT, ON OR AFTER THE DATE OF
    18         ENTERING SCHOOL SERVICE, PURSUANT TO SECTION 5705
    19         (RELATING TO MEMBER'S OPTIONS), WITH STATUTORY INTEREST
    20         TO DATE OF TRANSFER, MINUS THE AMOUNT TO BE RETURNED TO
    21         THE BOARD ON ACCOUNT OF RETURN TO SERVICE, THAT THE BOARD
    22         HAS DETERMINED IS TO BE CREDITED IN THE MEMBERS' SAVINGS
    23         ACCOUNT, FROM THE ANNUITY RESERVE ACCOUNT TO THE MEMBERS'
    24         SAVINGS ACCOUNT AND RESUME CREDITING OF STATUTORY
    25         INTEREST ON THE AMOUNT RESTORED TO HIS CREDIT [AND
    26         TRANSFER];
    27             (II)  TRANSFER THE BALANCE OF THE PRESENT VALUE OF
    28         THE TOTAL ANNUITY, MINUS THE AMOUNT TO BE RETURNED TO THE
    29         BOARD ON ACCOUNT OF RETURN TO SERVICE THAT THE BOARD HAS
    30         DETERMINED IS TO BE CREDITED IN THE STATE ACCUMULATION
    20010H0026B1905                 - 117 -

     1         ACCOUNT, FROM THE ANNUITY RESERVE ACCOUNT TO THE STATE
     2         ACCUMULATION ACCOUNT; [OR] AND
     3             (III)  CERTIFY TO THE MEMBER THE AMOUNT OF LUMP SUM
     4         AND ANNUITY PAYMENTS WITH STATUTORY INTEREST THE MEMBER
     5         IS TO RETURN TO THE BOARD, AND OF THOSE AMOUNTS, WHICH
     6         AMOUNT SHALL BE CREDITED TO THE MEMBERS' SAVINGS ACCOUNT
     7         AND CREDITED WITH STATUTORY INTEREST AS SUCH PAYMENTS ARE
     8         RETURNED AND WHICH AMOUNT SHALL BE CREDITED TO THE STATE
     9         ACCUMULATION ACCOUNT; OR
    10         (2)  IN CASE OF A MEMBER WHO IS NOT RECEIVING AN ANNUITY
    11     AND HAS NOT WITHDRAWN HIS TOTAL ACCUMULATED DEDUCTIONS,
    12     CONTINUE OR RESUME THE CREDITING OF STATUTORY INTEREST ON HIS
    13     TOTAL ACCUMULATED DEDUCTIONS DURING THE PERIOD HIS TOTAL
    14     ACCUMULATED DEDUCTIONS REMAIN IN THE FUND; OR
    15         (3)  IN CASE OF A FORMER STATE EMPLOYEE WHO IS NOT
    16     RECEIVING AN ANNUITY FROM THE SYSTEM AND HIS TOTAL
    17     ACCUMULATED DEDUCTIONS WERE WITHDRAWN, CERTIFY TO THE FORMER
    18     STATE EMPLOYEE THE ACCUMULATED DEDUCTIONS AS THEY WOULD HAVE
    19     BEEN AT THE TIME OF HIS SEPARATION HAD HE BEEN A FULL
    20     COVERAGE MEMBER TOGETHER WITH STATUTORY INTEREST FOR ALL
    21     PERIODS OF SUBSEQUENT STATE AND SCHOOL SERVICE TO THE DATE OF
    22     REPAYMENT. SUCH AMOUNT SHALL BE RESTORED BY HIM AND SHALL BE
    23     CREDITED WITH STATUTORY INTEREST AS SUCH PAYMENTS ARE
    24     RESTORED.
    25     * * *
    26     (J)  STATE EMPLOYEES ELECTING MULTIPLE SERVICE STATUS.--UPON
    27  RECEIPT OF NOTIFICATION FROM THE PUBLIC SCHOOL EMPLOYEES'
    28  RETIREMENT BOARD THAT A MEMBER WHO HAS ELECTED MULTIPLE SERVICE
    29  MEMBERSHIP HAS ELECTED TO RESTORE SCHOOL SERVICE OR PURCHASE
    30  CREDITABLE NONSCHOOL SERVICE IN THE PUBLIC SCHOOL EMPLOYEES'
    20010H0026B1905                 - 118 -

     1  RETIREMENT SYSTEM OR IS OBLIGATED TO RETURN BENEFITS TO THE
     2  PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD ON ACCOUNT OF ELECTING
     3  MULTIPLE SERVICE MEMBERSHIP HAS ELECTED TO PAY ALL OR PART OF
     4  THE AMOUNT DUE TO THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD
     5  BY SALARY DEDUCTIONS, THE BOARD SHALL COLLECT FROM THE EMPLOYEE
     6  THE AMOUNTS CERTIFIED BY THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT
     7  BOARD AS DUE AND OWING BY THE MEMBER AND CERTIFY AND TRANSFER TO
     8  THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD THE AMOUNTS SO
     9  COLLECTED.
    10     SECTION 21.  SECTIONS 5906(C), (G) AND (H), 5931(H), (I) AND
    11  (J), 5937 AND 5938 OF TITLE 71 ARE AMENDED TO READ:
    12  § 5906.  DUTIES OF HEADS OF DEPARTMENTS.
    13     * * *
    14     (C)  MEMBER CONTRIBUTIONS.--THE HEAD OF DEPARTMENT SHALL
    15  CAUSE THE REQUIRED PICKUP CONTRIBUTIONS FOR CURRENT SERVICE TO
    16  BE MADE AND SHALL CAUSE TO BE DEDUCTED ANY OTHER REQUIRED MEMBER
    17  CONTRIBUTIONS, INCLUDING, BUT NOT LIMITED TO, CONTRIBUTIONS OWED
    18  BY AN ACTIVE MEMBER WITH MULTIPLE SERVICE MEMBERSHIP FOR SCHOOL
    19  SERVICE AND CREDITABLE NONSCHOOL SERVICE IN THE PUBLIC SCHOOL
    20  EMPLOYEES' RETIREMENT SYSTEM, AND AMOUNTS CERTIFIED BY THE
    21  PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD AS DUE AND OWING ON
    22  ACCOUNT OF TERMINATION OF ANNUITIES FROM EACH PAYROLL. THE HEAD
    23  OF DEPARTMENT SHALL NOTIFY THE BOARD AT TIMES AND IN A MANNER
    24  PRESCRIBED BY THE BOARD OF THE COMPENSATION OF ANY NONELIGIBLE
    25  MEMBER TO WHOM THE LIMITATION UNDER IRC § 401(A)(17) EITHER
    26  APPLIES OR IS EXPECTED TO APPLY AND SHALL CAUSE SUCH MEMBER'S
    27  CONTRIBUTIONS DEDUCTED FROM PAYROLL TO CEASE AT THE LIMITATION
    28  UNDER IRC § 401(A)(17) ON THE PAYROLL DATE IF AND WHEN SUCH
    29  LIMIT SHALL BE REACHED. THE HEAD OF DEPARTMENT SHALL CERTIFY TO
    30  THE STATE TREASURER THE AMOUNTS PICKED UP AND DEDUCTED AND SHALL
    20010H0026B1905                 - 119 -

     1  SEND THE TOTAL AMOUNT PICKED UP AND DEDUCTED TOGETHER WITH A
     2  DUPLICATE OF SUCH VOUCHER TO THE SECRETARY OF THE BOARD EVERY
     3  PAY PERIOD. THE HEAD OF DEPARTMENT SHALL PAY PICKUP
     4  CONTRIBUTIONS FROM THE SAME SOURCE OF FUNDS WHICH IS USED TO PAY
     5  OTHER COMPENSATION TO THE EMPLOYEE. ON OR BEFORE JANUARY 31,
     6  1997, AND ON OR BEFORE JANUARY 31 OF EACH YEAR THEREAFTER, THE
     7  HEAD OF DEPARTMENT SHALL, AT THE TIME WHEN THE INCOME AND
     8  WITHHOLDING INFORMATION REQUIRED BY LAW IS FURNISHED TO EACH
     9  MEMBER, ALSO FURNISH THE AMOUNT OF PICKUP CONTRIBUTIONS MADE ON
    10  HIS BEHALF AND NOTIFY THE BOARD, IF IT HAS NOT BEEN PREVIOUSLY
    11  NOTIFIED, OF ANY NONELIGIBLE MEMBER WHOSE COMPENSATION IN THE
    12  PRECEDING YEAR EXCEEDED THE ANNUAL COMPENSATION LIMIT UNDER IRC
    13  § 401(A)(17). IF THE BOARD SHALL DETERMINE THAT THE MEMBER'S
    14  SAVINGS ACCOUNT SHALL HAVE BEEN CREDITED WITH PICKUP
    15  CONTRIBUTIONS FOR A NONELIGIBLE MEMBER IN THE PRECEDING YEAR
    16  WHICH ARE ATTRIBUTABLE TO COMPENSATION IN EXCESS OF THE
    17  LIMITATION UNDER IRC § 401(A)(17), OR WITH TOTAL MEMBER
    18  CONTRIBUTIONS FOR SUCH MEMBER WHICH WOULD CAUSE SUCH MEMBER'S
    19  CONTRIBUTIONS OR BENEFITS TO EXCEED ANY APPLICABLE LIMITATION
    20  UNDER IRC § 401(A)(17) OR 415(B), THE BOARD SHALL AS SOON AS
    21  PRACTICABLE REFUND TO THE MEMBER FROM HIS INDIVIDUAL MEMBER
    22  ACCOUNT SUCH AMOUNT, TOGETHER WITH THE STATUTORY INTEREST
    23  THEREON, AS WILL CAUSE THE MEMBER'S TOTAL MEMBER CONTRIBUTIONS
    24  IN THE PRECEDING YEAR NOT TO EXCEED THE APPLICABLE LIMIT. THE
    25  PAYMENT OF ANY SUCH REFUND TO THE MEMBER SHALL BE CHARGED TO THE
    26  MEMBER'S SAVINGS ACCOUNT.
    27     * * *
    28     (G)  FORMER SCHOOL EMPLOYEE CONTRIBUTORS.--THE HEAD OF
    29  DEPARTMENT SHALL, UPON THE EMPLOYMENT OF A FORMER CONTRIBUTOR TO
    30  THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM WHO IS NOT AN
    20010H0026B1905                 - 120 -

     1  ANNUITANT OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM,
     2  ADVISE SUCH EMPLOYEE OF HIS RIGHT TO ELECT WITHIN [30] 365 DAYS
     3  OF ENTRY INTO THE SYSTEM TO BECOME A MULTIPLE SERVICE MEMBER,
     4  AND IN THE CASE OF ANY SUCH EMPLOYEE WHO SO ELECTS AND HAS
     5  WITHDRAWN HIS ACCUMULATED DEDUCTIONS, REQUIRE HIM TO REINSTATE
     6  HIS CREDIT IN THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM.
     7  THE HEAD OF THE DEPARTMENT SHALL ADVISE THE BOARD OF SUCH
     8  ELECTION.
     9     (H)  FORMER SCHOOL EMPLOYEE ANNUITANTS.--THE HEAD OF
    10  DEPARTMENT SHALL, UPON THE EMPLOYMENT OF AN ANNUITANT OF THE
    11  PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM WHO APPLIES FOR
    12  MEMBERSHIP IN THE SYSTEM, ADVISE SUCH EMPLOYEE THAT HE MAY ELECT
    13  MULTIPLE SERVICE MEMBERSHIP WITHIN [30] 365 DAYS OF ENTRY INTO
    14  THE SYSTEM AND IF HE SO ELECTS HIS PUBLIC SCHOOL EMPLOYEE'S
    15  ANNUITY WILL BE DISCONTINUED EFFECTIVE UPON THE DATE OF HIS
    16  RETURN TO STATE SERVICE AND, UPON TERMINATION OF STATE SERVICE
    17  AND APPLICATION FOR AN ANNUITY, THE ANNUITY WILL BE ADJUSTED IN
    18  ACCORDANCE WITH SECTION 5706 (RELATING TO TERMINATION OF
    19  ANNUITIES). THE HEAD OF DEPARTMENT SHALL ADVISE THE BOARD OF
    20  SUCH ELECTION.
    21     * * *
    22  § 5931.  MANAGEMENT OF FUND AND ACCOUNTS.
    23     * * *
    24     (H)  VENTURE CAPITAL[.--VENTURE CAPITAL INVESTMENTS SHALL BE
    25  LIMITED TO NOT MORE THAN 2% OF THE BOOK VALUE OF THE TOTAL
    26  ASSETS OF THE FUND AS DETERMINED FOR FINANCIAL STATEMENT
    27  PURPOSES AS OF DECEMBER 31 NEXT PRECEDING THE DATE OF
    28  INVESTMENT. AN INVESTMENT SHALL BE DEEMED A VENTURE CAPITAL
    29  INVESTMENT IF IT RESULTS IN THE ACQUISITION OF EQUITY INTERESTS
    30  OR A COMBINATION OF DEBT AND EQUITY INTERESTS IN A BUSINESS
    20010H0026B1905                 - 121 -

     1  WHICH IS EXPECTED TO GROW SUBSTANTIALLY IN THE FUTURE AND IN
     2  WHICH THE EXPECTED RETURN ON INVESTMENT IS TO COME PREDOMINANTLY
     3  FROM AN INCREASE IN VALUE OF THE EQUITY INTERESTS AND ARE NOT
     4  INTERESTS IN OR SECURED BY REAL ESTATE. A VENTURE CAPITAL
     5  INVESTMENT MAY BE MADE ONLY IF, IN THE JUDGMENT OF THE BOARD,
     6  THE INVESTMENT IS REASONABLY LIKELY TO ENHANCE THE GENERAL
     7  WELFARE OF THIS COMMONWEALTH AND ITS CITIZENS AND MEETS THE
     8  STANDARD OF PRUDENCE SET FORTH IN SUBSECTION (A). IN DETERMINING
     9  WHETHER THE INVESTMENT MEETS THE STANDARD OF PRUDENCE, THE BOARD
    10  MAY CONSIDER, TOGETHER WITH THE EXPECTED RETURN ON AND THE RISK
    11  CHARACTERISTICS OF THE PARTICULAR INVESTMENT, THE ACTUAL AND
    12  EXPECTED FUTURE RETURNS AND THE RISK CHARACTERISTICS OF THE
    13  TOTAL VENTURE CAPITAL INVESTMENTS HELD BY THE BOARD AT THE TIME
    14  AND THE DEGREE TO WHICH THE PROPOSED NEW INVESTMENT WOULD
    15  PROMOTE FURTHER DIVERSIFICATION WITHIN THE VENTURE CAPITAL ASSET
    16  CLASS.], PRIVATE PLACEMENT AND ALTERNATIVE INVESTMENTS.--THE
    17  BOARD IN ITS PRUDENT DISCRETION MAY MAKE ANY VENTURE CAPITAL
    18  INVESTMENT, PRIVATE PLACEMENT INVESTMENT OR OTHER ALTERNATIVE
    19  INVESTMENT OF ANY KIND, STRUCTURE OR MANNER WHICH MEETS THE
    20  STANDARD OF PRUDENCE SET FORTH IN SUBSECTION (A).
    21     (I)  VEHICLES FOR AUTHORIZED INVESTMENTS.--THE BOARD IN ITS
    22  PRUDENT DISCRETION MAY MAKE ANY INVESTMENTS WHICH MEET THE
    23  STANDARD OF PRUDENCE SET FORTH IN SUBSECTION (A) BY [BECOMING A
    24  LIMITED PARTNER IN PARTNERSHIPS THAT WILL HOLD SUCH INVESTMENTS;
    25  OR BY ACQUIRING SHARES OR UNITS OF PARTICIPATION OR OTHERWISE
    26  PARTICIPATING BENEFICIALLY IN BANK COLLECTIVE TRUSTS OR IN THE
    27  SEPARATE ACCOUNTS OF ANY INSURANCE COMPANY AUTHORIZED TO DO
    28  BUSINESS IN THIS COMMONWEALTH; OR BY ACQUIRING STOCKS OR SHARES
    29  OR UNITS OF PARTICIPATION OR OTHERWISE PARTICIPATING
    30  BENEFICIALLY IN THE FUND OF ANY CORPORATION OR TRUST ORGANIZED
    20010H0026B1905                 - 122 -

     1  OR CREATED AND EXISTING UNDER THE LAWS OF THE UNITED STATES OR
     2  OF ANY STATE, DISTRICT OR TERRITORY THEREOF, WHICH FUND IS
     3  MAINTAINED FOR AND CONSISTS OF ASSETS OF EMPLOYEES' BENEFIT
     4  TRUSTS, INCLUDING GOVERNMENTAL PLANS AS DEFINED IN IRC § 414(D)
     5  OR WHICH MEET THE REQUIREMENTS FOR QUALIFICATION UNDER IRC §
     6  401] ACQUIRING ANY TYPE OF INTEREST IN A BUSINESS ORGANIZATION
     7  EXISTING UNDER THE LAWS OF ANY JURISDICTION, PROVIDED THAT, IN
     8  ANY SUCH CASE, THE LIABILITY OF THE STATE EMPLOYEES' RETIREMENT
     9  FUND SHALL BE LIMITED TO THE AMOUNT OF ITS INVESTMENT.
    10     (J)  LEGISLATIVE DECLARATION CONCERNING CERTAIN AUTHORIZED
    11  INVESTMENTS.--THE GENERAL ASSEMBLY FINDS AND DECLARES THAT
    12  AUTHORIZED INVESTMENTS OF THE FUND MADE BY OR ON BEHALF OF THE
    13  BOARD UNDER THIS SECTION WHEREBY THE BOARD BECOMES A JOINT OWNER
    14  OR STOCKHOLDER IN ANY COMPANY, CORPORATION [OR], ASSOCIATION OR
    15  OTHER LAWFUL BUSINESS ORGANIZATION ARE OUTSIDE THE SCOPE OF THE
    16  ORIGINAL INTENT OF AND THEREFORE DO NOT VIOLATE THE PROHIBITION
    17  SET FORTH IN SECTION 8 OF ARTICLE VIII OF THE CONSTITUTION OF
    18  PENNSYLVANIA.
    19  § 5937.  ENFORCEMENT OFFICERS' BENEFIT ACCOUNT.
    20     (A)  CREDITS AND CHARGES TO ACCOUNT.--THE ENFORCEMENT
    21  OFFICERS' BENEFIT ACCOUNT SHALL BE THE LEDGER ACCOUNT TO WHICH
    22  SHALL BE CREDITED MONEYS TRANSFERRED FROM THE ENFORCEMENT
    23  OFFICERS' RETIREMENT ACCOUNT IN THE STATE STORES FUND ACCORDING
    24  TO THE PROVISIONS OF THE [LIQUOR CODE,] ACT OF APRIL 12, 1951
    25  (P.L.90, NO.21) KNOWN AS THE LIQUOR CODE, AND ANY ADDITIONAL
    26  COMMONWEALTH OR OTHER EMPLOYER CONTRIBUTIONS PROVIDED FOR IN
    27  SECTION 5507 (RELATING TO CONTRIBUTIONS BY THE COMMONWEALTH AND
    28  OTHER EMPLOYERS) WHICH ARE CREDITABLE TO THE ENFORCEMENT
    29  OFFICERS' BENEFIT ACCOUNT. THE ENFORCEMENT OFFICERS' BENEFIT
    30  ACCOUNT SHALL BE CREDITED WITH THE REQUIRED INTEREST. IN
    20010H0026B1905                 - 123 -

     1  ADDITION, UPON THE FILING OF AN APPLICATION FOR AN ANNUITY BY A
     2  MEMBER WHO IS AN ENFORCEMENT OFFICER OF THE PENNSYLVANIA LIQUOR
     3  CONTROL BOARD, THE TOTAL ACCUMULATED DEDUCTIONS STANDING TO THE
     4  CREDIT OF THE MEMBER IN THE MEMBERS' SAVINGS ACCOUNT AND THE
     5  NECESSARY RESERVES FROM THE STATE ACCUMULATION ACCOUNT SHALL BE
     6  TRANSFERRED TO THE ENFORCEMENT OFFICERS' BENEFIT ACCOUNT.
     7  THEREAFTER, THE TOTAL ANNUITY OF SUCH ANNUITANT SHALL BE CHARGED
     8  TO THE ENFORCEMENT OFFICERS' BENEFIT ACCOUNT AND PAID FROM THE
     9  FUND.
    10     (B)  TRANSFERS FROM ACCOUNT.--SHOULD THE SAID ANNUITANT BE
    11  SUBSEQUENTLY RESTORED TO ACTIVE SERVICE, THE PRESENT VALUE OF
    12  THE MEMBER'S ANNUITY AT THE TIME OF REENTRY INTO STATE SERVICE
    13  SHALL BE TRANSFERRED FROM THE ENFORCEMENT OFFICERS' BENEFIT
    14  ACCOUNT AND PLACED TO HIS INDIVIDUAL CREDIT IN THE MEMBERS'
    15  SAVINGS ACCOUNT. IN ADDITION, THE ACTUARIAL RESERVE FOR HIS
    16  ANNUITY CALCULATED AS IF HE HAD BEEN A MEMBER OF CLASS A IF THE
    17  ANNUITANT DOES NOT HAVE ANY CLASS AA SERVICE CREDITED AND
    18  CALCULATED AS IF HE HAD BEEN A MEMBER OF CLASS AA IF THE
    19  ANNUITANT DOES HAVE CLASS AA SERVICE CREDITED LESS THE AMOUNT
    20  TRANSFERRED TO THE MEMBERS' SAVINGS ACCOUNT SHALL BE TRANSFERRED
    21  FROM THE ENFORCEMENT OFFICERS' BENEFIT ACCOUNT TO THE STATE
    22  ACCUMULATION ACCOUNT. UPON SUBSEQUENT RETIREMENT OTHER THAN AS
    23  AN ENFORCEMENT OFFICER THE ACTUARIAL RESERVE REMAINING IN THE
    24  ENFORCEMENT OFFICERS' BENEFIT ACCOUNT SHALL BE TRANSFERRED TO
    25  THE APPROPRIATE RESERVE ACCOUNT.
    26  § 5938.  SUPPLEMENTAL ANNUITY ACCOUNT.
    27     THE SUPPLEMENTAL ANNUITY ACCOUNT SHALL BE THE LEDGER ACCOUNT
    28  TO WHICH SHALL BE CREDITED ALL CONTRIBUTIONS FROM THE
    29  COMMONWEALTH IN ACCORDANCE WITH [SECTIONS] SECTION 5507(B)
    30  (RELATING TO CONTRIBUTIONS BY THE COMMONWEALTH AND OTHER
    20010H0026B1905                 - 124 -

     1  EMPLOYERS)[, 5708.3(F) (RELATING TO FUNDING FOR SUPPLEMENTAL
     2  ANNUITIES COMMENCING 1994) AND 5708.5(F) (RELATING TO FUNDING
     3  FOR SUPPLEMENTAL ANNUITIES COMMENCING 1998)] FOR THE PAYMENT OF
     4  THE SUPPLEMENTAL ANNUITIES PROVIDED IN SECTIONS 5708 (RELATING
     5  TO SUPPLEMENTAL ANNUITIES), 5708.1 (RELATING TO ADDITIONAL
     6  SUPPLEMENTAL ANNUITIES), 5708.2 (RELATING TO FURTHER ADDITIONAL
     7  SUPPLEMENTAL ANNUITIES), 5708.3 (RELATING TO SUPPLEMENTAL
     8  ANNUITIES COMMENCING 1994), 5708.4 (RELATING TO SPECIAL
     9  SUPPLEMENTAL POSTRETIREMENT ADJUSTMENT) AND 5708.5 (RELATING TO
    10  SUPPLEMENTAL ANNUITIES COMMENCING 1998). THE SUPPLEMENTAL
    11  ANNUITY ACCOUNT SHALL BE CREDITED WITH VALUATION INTEREST. THE
    12  RESERVES NECESSARY FOR THE PAYMENT OF SUCH SUPPLEMENTAL
    13  ANNUITIES SHALL BE TRANSFERRED FROM THE SUPPLEMENTAL ANNUITY
    14  ACCOUNT TO THE ANNUITY RESERVE ACCOUNT AS PROVIDED IN SECTION
    15  5935 (RELATING TO ANNUITY RESERVE ACCOUNT).
    16     SECTION 22.  (A)  SERVICE PERFORMED BY A MEMBER OF THE PUBLIC
    17  SCHOOL EMPLOYEES' RETIREMENT SYSTEM PRIOR TO DECEMBER 31, 2001,
    18  SHALL NOT BE INCLUDED WHEN CALCULATING THE 95 DAYS AN ANNUITANT
    19  MAY RETURN TO SERVICE UNDER 24 PA.C.S. § 8346(B).
    20     (B)  SERVICE PERFORMED BY A MEMBER OF THE STATE EMPLOYEES'
    21  RETIREMENT SYSTEM PRIOR TO JULY 1, 2001, SHALL NOT BE INCLUDED
    22  WHEN CALCULATING THE 95 DAYS AN ANNUITANT MAY RETURN TO SERVICE
    23  IN A CALENDAR YEAR WITHOUT LOSS OF ANNUITY PURSUANT TO 71
    24  PA.C.S. § 5706.
    25     SECTION 23.  (A)  A MEMBER WHOSE MOST RECENT PERIOD OF
    26  EMPLOYMENT BEGAN BEFORE THE EFFECTIVE DATE OF THIS SECTION SHALL
    27  NOT HAVE BENEFITS FROM THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT
    28  SYSTEM REDUCED BY THE LIMITATIONS ON BENEFITS UNDER SECTION 415
    29  OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26
    30  U.S.C. § 415), AS AMENDED, TO LESS THAN THE MEMBER OTHERWISE
    20010H0026B1905                 - 125 -

     1  WOULD HAVE RECEIVED HAD THIS ACT NOT BEEN ENACTED.
     2     (B)  A MEMBER WHOSE MOST RECENT PERIOD OF EMPLOYMENT BEGAN
     3  BEFORE THE EFFECTIVE DATE OF THIS SECTION SHALL NOT HAVE HIS OR
     4  HER BENEFITS FROM THE STATE EMPLOYEES' RETIREMENT SYSTEM REDUCED
     5  BY THE LIMITATIONS ON BENEFITS UNDER SECTION 415 OF THE INTERNAL
     6  REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 415), AS
     7  AMENDED, TO LESS THAN HE OR SHE OTHERWISE WOULD HAVE RECEIVED
     8  HAD THIS ACT NOT BEEN ENACTED.
     9     SECTION 24.  ANY AND ALL INVESTMENTS OF THE PUBLIC SCHOOL
    10  EMPLOYEES' RETIREMENT BOARD AND THE STATE EMPLOYEES' RETIREMENT
    11  BOARD, WHICH ON THE EFFECTIVE DATE OF THIS SECTION ARE OWNED OR
    12  HELD THROUGH A VEHICLE AS DESCRIBED IN 24 PA.C.S § 8521(I) OR 71
    13  PA.C.S § 5931(I), AS APPLICABLE, SHALL BE DEEMED TO HAVE BEEN
    14  LAWFULLY MADE THROUGH SUCH VEHICLE AT INCEPTION.
    15     SECTION 25.  IF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD
    16  DETERMINES THAT ITS AUTHORITY OVER HEALTH INSURANCE IS IMPAIRED
    17  BECAUSE OF A JUDICIAL DECISION RELATING TO 24 PA.C.S. PART V,
    18  WHICH HAS BECOME FINAL, THE BOARD SHALL TRANSMIT NOTICE OF ITS
    19  DETERMINATION TO THE LEGISLATIVE REFERENCE BUREAU FOR
    20  PUBLICATION IN THE PENNSYLVANIA BULLETIN.
    21     SECTION 26.  EXCEPT AS MAY BE OTHERWISE SPECIFICALLY
    22  PROVIDED, REFERENCES IN THIS ACT TO PROVISIONS OF THE INTERNAL
    23  REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 1 ET SEQ.),
    24  INCLUDING FOR THIS PURPOSE ADMINISTRATIVE REGULATIONS
    25  PROMULGATED THEREUNDER, ARE INTENDED TO INCLUDE SUCH LAWS AND
    26  REGULATIONS IN EFFECT ON THE EFFECTIVE DATE OF THIS SECTION AND
    27  AS THEY MAY HEREAFTER BE AMENDED OR SUPPLEMENTED OR SUPPLANTED
    28  BY SUCCESSOR PROVISIONS.
    29     SECTION 27.  (A)  NOTWITHSTANDING THE PROVISIONS OF 24
    30  PA.C.S. § 8503(B), THE STATEMENT FOR EACH MEMBER PREPARED BY THE
    20010H0026B1905                 - 126 -

     1  PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD FOR THE PERIODS ENDING
     2  JUNE 30, 2001, AND JUNE 30, 2002, AND ANY OTHER STATEMENTS OR
     3  ESTIMATES OF BENEFITS PREPARED BY THE BOARD PURSUANT TO THE
     4  PUBLIC SCHOOL EMPLOYEES' RETIREMENT CODE FROM THE EFFECTIVE DATE
     5  OF THIS SECTION TO JUNE 30, 2002, NEED NOT REFLECT PROVISIONS OF
     6  THIS ACT.
     7     (B)  NOTWITHSTANDING THE PROVISIONS OF 71 PA.C.S. § 5903(B),
     8  THE STATEMENT FOR EACH MEMBER PREPARED BY THE STATE EMPLOYEES'
     9  RETIREMENT BOARD FOR THE PERIOD ENDING DECEMBER 31, 2001, AND
    10  ANY OTHER STATEMENTS OR ESTIMATES OF BENEFITS PREPARED BY THE
    11  BOARD PURSUANT TO THE STATE EMPLOYEES' RETIREMENT CODE FROM THE
    12  EFFECTIVE DATE OF THIS SECTION TO JUNE 30, 2002, NEED NOT
    13  REFLECT PROVISIONS OF THIS ACT.
    14     SECTION 28.  (A)  NOTWITHSTANDING THE PROVISIONS OF 24
    15  PA.C.S. PT. IV, THE OBLIGATION OF THE PUBLIC SCHOOL EMPLOYEES'
    16  RETIREMENT BOARD TO MAKE PAYMENTS WITHIN SPECIFIED TIME PERIODS
    17  OF THE RECEIPT OF APPLICATIONS FOR BENEFITS OR OTHER INFORMATION
    18  SHALL NOT APPLY FROM THE EFFECTIVE DATE OF THIS SECTION TO JULY
    19  2, 2002.
    20     (B)  NOTWITHSTANDING THE PROVISIONS OF 71 PA.C.S. PT. XXV,
    21  THE OBLIGATION OF THE STATE EMPLOYEES' RETIREMENT BOARD TO MAKE
    22  PAYMENTS WITHIN SPECIFIED TIME PERIODS OF THE RECEIPT OF
    23  APPLICATIONS FOR BENEFITS OR OTHER INFORMATION SHALL NOT APPLY
    24  FROM THE EFFECTIVE DATE OF THIS SECTION TO JUNE 30, 2002.
    25     SECTION 29.  NOTWITHSTANDING THE LIMITATION CONTAINED IN 24
    26  PA.C.S. § 8507(C), ANY ACTIVE MEMBER OF THE PUBLIC SCHOOL
    27  EMPLOYEES' RETIREMENT SYSTEM WHO WAS FORMERLY AN ACTIVE MEMBER
    28  IN THE STATE EMPLOYEES' RETIREMENT SYSTEM AND WHOSE SERVICE
    29  CREDIT IN THE STATE EMPLOYEES' RETIREMENT SYSTEM HAS NOT BEEN
    30  CONVERTED TO SERVICE CREDITED IN ANOTHER PUBLIC PENSION PLAN OR
    20010H0026B1905                 - 127 -

     1  RETIREMENT SYSTEM IN THIS COMMONWEALTH MAY ELECT TO BECOME A
     2  MULTIPLE SERVICE MEMBER ON OR BEFORE DECEMBER 31, 2003.
     3     SECTION 30.  NOTWITHSTANDING THE LIMITATION CONTAINED IN 71
     4  PA.C.S. § 5907(C), ANY ACTIVE MEMBER OF THE STATE EMPLOYEES'
     5  RETIREMENT SYSTEM WHO WAS FORMERLY AN ACTIVE MEMBER OF THE
     6  PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM AND WHOSE SERVICE
     7  CREDIT IN THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM HAS NOT
     8  BEEN CONVERTED TO SERVICE CREDITED IN ANOTHER PUBLIC PENSION
     9  PLAN OR RETIREMENT SYSTEM IN THIS COMMONWEALTH MAY ELECT TO
    10  BECOME A MULTIPLE SERVICE MEMBER ON OR BEFORE DECEMBER 31, 2003.
    11     SECTION 31.  NOTWITHSTANDING ANY OTHER PROVISIONS OF LAW, THE
    12  PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD SHALL, EFFECTIVE FOR
    13  THE FISCAL YEAR BEGINNING JULY 1, 2001, RECERTIFY TO THE
    14  SECRETARY OF THE BUDGET AND THE EMPLOYERS, WITHIN 15 DAYS OF THE
    15  EFFECTIVE DATE OF THIS SECTION, THE CONTRIBUTIONS, RATES,
    16  FACTORS AND AMOUNTS SET FORTH IN 24 PA.C.S. § 8502(K) TO REFLECT
    17  THE IMPACT OF THE AMENDMENT OF 24 PA.C.S. § 8509(B). THE BOARD'S
    18  RECERTIFICATION SHALL REFLECT ALL CHANGES IN THE CONTRIBUTIONS,
    19  RATES AND AMOUNTS PREVIOUSLY CERTIFIED BY THE BOARD PRIOR TO THE
    20  EFFECTIVE DATE OF THIS SECTION FOR THE FISCAL YEAR BEGINNING
    21  JULY 1, 2001, REQUIRED TO COMPLY WITH 24 PA.C.S § 8328 CAUSED BY
    22  THE AMENDMENT OF 24 PA.C.S. § 8509(B). THIS RECERTIFICATION
    23  SHALL SUPERSEDE THE PRIOR CERTIFICATION FOR ALL PURPOSES.
    24     SECTION 32.  NOTWITHSTANDING ANY OTHER PROVISION OF LAW, THE
    25  LIABILITY FOR ANY ADDITIONAL BENEFITS ESTABLISHED BY THIS ACT
    26  SHALL BE FUNDED IN EQUAL DOLLAR ANNUAL PAYMENTS OVER A PERIOD OF
    27  TEN YEARS COMMENCING JULY 1, 2002.
    28     SECTION 33.  (A)  NOTHING IN THIS ACT WHICH AMENDS OR
    29  SUPPLEMENTS PROVISIONS OF 24 PA.C.S. PT. IV IN RELATION TO
    30  REQUIREMENTS FOR QUALIFICATION OF THE PUBLIC SCHOOL EMPLOYEES'
    20010H0026B1905                 - 128 -

     1  RETIREMENT SYSTEM AS A QUALIFIED PENSION PLAN UNDER THE INTERNAL
     2  REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 401(A) OR
     3  415(B)), AS AMENDED, NOR ANY CONSTRUCTION OF SUCH PROVISIONS AS
     4  SO AMENDED OR SUPPLEMENTED OR ANY RULES OR REGULATIONS ADOPTED
     5  UNDER SUCH PART SHALL CREATE IN ANY MEMBER OF THE SYSTEM OR IN
     6  ANY OTHER PERSON CLAIMING AN INTEREST IN THE ACCOUNT OF ANY
     7  MEMBER A CONTRACTUAL RIGHT, EITHER EXPRESS OR IMPLIED IN SUCH
     8  PROVISION. SUCH PROVISION SHALL REMAIN SUBJECT TO THE INTERNAL
     9  REVENUE CODE OF 1986, AS AMENDED, AND REGULATIONS THEREUNDER AS
    10  THE SAME MAY HEREAFTER BE AMENDED, AND THE GENERAL ASSEMBLY
    11  RESERVES TO ITSELF SUCH FURTHER EXERCISE OF ITS LEGISLATIVE
    12  POWER TO AMEND OR SUPPLEMENT SUCH PROVISIONS AS MAY FROM TIME TO
    13  TIME BE REQUIRED TO MAINTAIN THE QUALIFICATION OF SUCH SYSTEM AS
    14  A QUALIFIED PENSION PLAN UNDER SECTION 401(A) OF THE INTERNAL
    15  REVENUE CODE OF 1986.
    16     (B)  NOTHING IN THIS ACT WHICH AMENDS OR SUPPLEMENTS
    17  PROVISIONS OF 71 PA.C.S. PT. XXV IN RELATION TO REQUIREMENTS FOR
    18  QUALIFICATION OF THE STATE EMPLOYEES' RETIREMENT SYSTEM AS A
    19  QUALIFIED PENSION PLAN UNDER THE INTERNAL REVENUE CODE OF 1986
    20  (PUBLIC LAW 99-514, 26 U.S.C. § 401(A) AND § 415(B)) NOR ANY
    21  CONSTRUCTION OF 71 PA.C.S. PT. XXV, AS SO AMENDED OR
    22  SUPPLEMENTED OR ANY RULES OR REGULATIONS ADOPTED UNDER 71
    23  PA.C.S. PT. XXV SHALL CREATE IN ANY MEMBER OF THE SYSTEM OR IN
    24  OF ANY OTHER PERSON CLAIMING AN INTEREST IN THE ACCOUNT OF ANY
    25  SUCH MEMBER A CONTRACTUAL RIGHT, EITHER EXPRESS OR IMPLIED. THE
    26  PROVISIONS OF 71 PA.C.S. PT. XXV SHALL REMAIN SUBJECT TO THE
    27  INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND REGULATIONS
    28  THEREUNDER AS THE SAME MAY HEREAFTER BE AMENDED, AND THE GENERAL
    29  ASSEMBLY RESERVES TO ITSELF SUCH FURTHER EXERCISE OF ITS
    30  LEGISLATIVE POWER TO AMEND OR SUPPLEMENT SUCH PROVISIONS AS MAY
    20010H0026B1905                 - 129 -

     1  FROM TIME TO TIME BE REQUIRED IN ORDER TO MAINTAIN THE
     2  QUALIFICATION OF SUCH SYSTEM AS A QUALIFIED PENSION PLAN UNDER
     3  SECTION 401(A) OF THE INTERNAL REVENUE CODE OF 1986.
     4     SECTION 34.  (A)  NOTHING IN THIS ACT SHALL BE CONSTRUED OR
     5  DEEMED TO IMPLY THAT, BUT FOR THE EXPRESSED APPLICATIONS OF THE
     6  LIMITATIONS ON BENEFITS UNDER SECTION 415 OF THE INTERNAL
     7  REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 415), AS
     8  AMENDED, THOSE LIMITATIONS WOULD NOT OTHERWISE APPLY TO MEMBERS
     9  OF THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM AND THE
    10  BENEFITS PAYABLE PURSUANT TO 24 PA.C.S. PT. IV.
    11     (B)  NOTHING IN THIS ACT SHALL BE CONSTRUED OR DEEMED TO
    12  IMPLY THAT, BUT FOR THE EXPRESSED APPLICATIONS OF THE
    13  LIMITATIONS ON BENEFITS UNDER SECTION 401(A) OR 415 OF THE
    14  INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. §
    15  401 OR 415), THOSE LIMITATIONS WOULD NOT OTHERWISE APPLY TO
    16  MEMBERS OF THE STATE EMPLOYEES' RETIREMENT SYSTEM AND THE
    17  BENEFITS PAYABLE PURSUANT TO 71 PA.C.S. PT. XXV.
    18     SECTION 35.  (A)  EXCEPT AS PROVIDED IN SECTION 23(A), THIS
    19  ACT SHALL BE CONSTRUED AND ADMINISTERED IN SUCH MANNER THAT THE
    20  PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM WILL SATISFY THE
    21  REQUIREMENTS NECESSARY TO QUALIFY AS A QUALIFIED PENSION PLAN
    22  UNDER SECTION 415(B) OF THE INTERNAL REVENUE CODE OF 1986
    23  (PUBLIC LAW 99-514, 26 U.S.C. § 415(B)).
    24     (B)  EXCEPT AS PROVIDED IN SECTION 23(B), THIS ACT SHALL BE
    25  CONSTRUED AND ADMINISTERED IN SUCH MANNER THAT THE STATE
    26  EMPLOYEES' RETIREMENT SYSTEM WILL SATISFY THE REQUIREMENTS
    27  NECESSARY TO QUALIFY AS A QUALIFIED PENSION PLAN UNDER SECTION
    28  415(B) OF THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514,
    29  26 U.S.C. §415(B)).
    30     SECTION 36.  SEVERABILITY OF THIS ACT SHALL BE AS FOLLOWS:
    20010H0026B1905                 - 130 -

     1         (1)  EXCEPT AS SET FORTH IN PARAGRAPH (2), IF ANY
     2     PROVISION OF THIS ACT OR ITS APPLICATION TO ANY PERSON OR
     3     CIRCUMSTANCE IS HELD INVALID, THE INVALIDITY SHALL NOT AFFECT
     4     OTHER PROVISIONS OR APPLICATIONS OF THIS ACT WHICH CAN BE
     5     GIVEN EFFECT WITHOUT THE INVALID PROVISION OR APPLICATION.
     6         (2)  IF ANY OF THE FOLLOWING PROVISIONS OF THIS ACT IS
     7     HELD INVALID, INDEPENDENT OF ITS APPLICATION TO ANY PERSON OR
     8     CIRCUMSTANCE, ALL OF THE FOLLOWING PROVISIONS OF THIS ACT ARE
     9     VOID:
    10             (I)  THE AMENDMENT OF THE DEFINITIONS OF "BASIC
    11         CONTRIBUTION RATE," "CLASS OF SERVICE MULTIPLIER,"
    12         "STANDARD SINGLE LIFE ANNUITY" AND "SUPERANNUATION OR
    13         NORMAL RETIREMENT AGE" IN 24 PA.C.S. § 8102.
    14             (II)  THE AMENDMENT OR ADDITION OF 24 PA.C.S. §§
    15         8303; 8304; 8305, EXCEPT FOR SUBSECTION (C)(4)(II);
    16         8305.1; 8323(A), (C) AND (C.1); 8328; 8346(D)(2)(I);
    17         8348.1; 8348.2; 8348.3; 8348.5; AND 8525.
    18             (III)  EXCEPT INSOFAR AS RELATES TO SECTION 415(B) OF
    19         THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26
    20         U.S.C. § 1 ET SEQ.), THE AMENDMENT OF THE DEFINITIONS OF
    21         "ACTIVE MEMBER," "CLASS OF SERVICE MULTIPLIER," "CREDITED
    22         SERVICE" AND "INACTIVE MEMBER" IN 71 PA.C.S. § 5102.
    23             (IV)  EXCEPT INSOFAR AS RELATES TO SECTION 415(B) OF
    24         THE INTERNAL REVENUE CODE OF 1986, THE AMENDMENT OF 71
    25         PA.C.S. §§ 5302, 5305, 5501 AND 5502.
    26             (V)  THE AMENDMENT OR ADDITION OF 71 PA.C.S. §§ 5303;
    27         5306, EXCEPT FOR SUBSECTION (A.1)(7)(II); 5306.1; 5306.2;
    28         5502.1; 5507; 5508; 5702(C); 5706(C)(2)(I); 5707(F);
    29         5708.1; 5708.2; 5708.3; 5708.5; 5937; AND 5938.
    30     SECTION 36.1.  THE AMENDMENT OF THE DEFINITION OF "VESTEE" IN
    20010H0026B1905                 - 131 -

     1  24 PA.C.S. §§ 8102, 8307, 8308, 8345(A) AND 8507(G) SHALL APPLY
     2  TO ALL MEMBERS OF THE SCHOOL EMPLOYEES' RETIREMENT SYSTEM WHO
     3  ARE ACTIVE OR INACTIVE ON LEAVE WITHOUT PAY ON THE EFFECTIVE
     4  DATE OF THIS SECTION, AND TO ANY FORMER SCHOOL EMPLOYEE WHO IS A
     5  MULTIPLE SERVICE MEMBER, IS A STATE EMPLOYEE AND IS A MEMBER OF
     6  THE STATE EMPLOYEES' RETIREMENT SYSTEM ON THE EFFECTIVE DATE OF
     7  THIS SECTION.
     8     SECTION 37.  THE AMENDMENT OF THE DEFINITION OF "VESTEE" IN
     9  71 PA.C.S. § 5102 AND 71 PA.C.S. §§ 5308(B), 5309, 5704(B) AND
    10  5705(A) SHALL APPLY TO ALL MEMBERS OF THE STATE EMPLOYEES'
    11  RETIREMENT SYSTEM WHO ARE ACTIVE OR INACTIVE ON LEAVE WITHOUT
    12  PAY ON JULY 1, 2001, AND TO ANY FORMER STATE EMPLOYEE WHO IS A
    13  MULTIPLE SERVICE MEMBER, IS A SCHOOL EMPLOYEE AND IS A MEMBER OF
    14  THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT SYSTEM ON JULY 1, 2001.
    15     SECTION 38.  (A)  ELECTIONS TO BECOME A CLASS T-D MEMBER MAY
    16  BE FILED WITH THE PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD
    17  BEFORE JULY 1, 2001, BUT WILL NOT BE EFFECTIVE UNTIL JULY 1,
    18  2001, AND WILL BE EFFECTIVE ONLY IF THE MEMBER IS ELIGIBLE TO
    19  MAKE THE ELECTION ON JULY 1, 2001.
    20     (B)  ELECTIONS TO BECOME A CLASS AA MEMBER MAY BE FILED WITH
    21  THE STATE EMPLOYEES' RETIREMENT BOARD BEFORE JULY 1, 2001, BUT
    22  WILL NOT BE EFFECTIVE UNTIL JULY 1, 2001, AND WILL BE EFFECTIVE
    23  ONLY IF THE MEMBER IS ELIGIBLE TO MAKE THE ELECTION ON JULY 1,
    24  2001.
    25     SECTION 39.  THIS ACT SHALL TAKE EFFECT AS FOLLOWS:
    26         (1)  THE FOLLOWING PROVISIONS SHALL TAKE EFFECT
    27     IMMEDIATELY:
    28             (I)  SECTION 1 OF THIS ACT.
    29             (II)  THE AMENDMENT OF THE DEFINITIONS OF "ACTIVE
    30         MEMBER," "CREDITED SERVICE" AND "INACTIVE MEMBER" IN 24
    20010H0026B1905                 - 132 -

     1         PA.C.S. § 8102.
     2             (III)  THE AMENDMENT OF 24 PA.C.S. § 8302(A).
     3             (IV)  THE AMENDMENT OF 24 PA.C.S. § 8321.
     4             (V)  THE AMENDMENT OR ADDITION OF 24 PA.C.S. §
     5         8327(B)(1) AND (2).
     6             (VI)  THE ADDITION OF 24 PA.C.S. § 8342(C).
     7             (VII)  THE ADDITION OF 24 PA.C.S. § 8344(E).
     8             (VIII)  THE AMENDMENT OF 24 PA.C.S. § 8501(A) AND
     9         (B).
    10             (IX)  THE REPEAL OF 24 PA.C.S. § 8502.1.
    11             (X)  THE AMENDMENT OF 24 PA.C.S. § 8503(A).
    12             (XI)  THE AMENDMENT OF 24 PA.C.S. § 8506(C).
    13             (XII)  THE AMENDMENT OF 24 PA.C.S. § 8509(B).
    14             (XIII)  THE AMENDMENT OF 24 PA.C.S. § 8521(H), (I)
    15         AND (J).
    16             (XIV)  THE ADDITION OF 24 PA.C.S. PT. V.
    17             (XV)  THE AMENDMENT OF THE DEFINITIONS OF "ACTIVE
    18         MEMBER," "CREDITED SERVICE" AND "INACTIVE MEMBER" IN 71
    19         PA.C.S. § 5102.
    20             (XVI)  THE AMENDMENT OF 71 PA.C.S. § 5302(A).
    21             (XVII)  THE AMENDMENT OF 71 PA.C.S. § 5304(A).
    22             (XVIII)  THE AMENDMENT OF 71 PA.C.S. § 5305(B).
    23             (XIX)  THE ADDITION OF 71 PA.C.S. § 5306.2.
    24             (XX)  THE AMENDMENT OF 71 PA.C.S. § 5501.
    25             (XXI)  THE AMENDMENT OF 71 PA.C.S. § 5502.
    26             (XXII)  THE ADDITION OF 71 PA.C.S. § 5502.1.
    27             (XXIII)  THE AMENDMENT OR ADDITION OF 71 PA.C.S. §
    28         5702(C) AND (D).
    29             (XXIV)  THE AMENDMENT OR ADDITION OF 71 PA.C.S. §
    30         5704(F) AND (G).
    20010H0026B1905                 - 133 -

     1             (XXV)  THE ADDITION OF 71 PA.C.S § 5707(F).
     2             (XXVI)  THE AMENDMENT OF 71 PA.C.S. § 5901(A) AND
     3         (B).
     4             (XXVII)  THE AMENDMENT OF 71 PA.C.S. § 5903(A).
     5             (XXVIII)  AS MUCH OF THE AMENDMENT OF 71 PA.C.S. §
     6         5906(C) AS RELATES TO SECTION 415 OF THE INTERNAL REVENUE
     7         CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C. § 415).
     8             (XXIX)  THE AMENDMENT OF 71 PA.C.S. § 5931(H), (I)
     9         AND (J).
    10             (XXX)  THE AMENDMENT OF 71 PA.C.S. § 5937.
    11             (XXXI)  SECTION 23 OF THIS ACT.
    12             (XXXII)  SECTION 24 OF THIS ACT.
    13             (XXXIII)  SECTION 25 OF THIS ACT.
    14             (XXXIV)  SECTION 26 OF THIS ACT.
    15             (XXXV)  SECTION 27 OF THIS ACT.
    16             (XXXVI)  SECTION 28 OF THIS ACT.
    17             (XXXVII)  SECTION 31 OF THIS ACT.
    18             (XXXVIII)  SECTION 32 OF THIS ACT.
    19             (XXXIX)  SECTION 33 OF THIS ACT.
    20             (XL)  SECTION 34 OF THIS ACT.
    21             (XLI)  SECTION 35 OF THIS ACT.
    22             (XLII)  SECTION 36 OF THIS ACT.
    23             (XLIII)  SECTION 38 OF THIS ACT.
    24             (XLIV)  THIS SECTION.
    25         (2)  THE FOLLOWING PROVISIONS SHALL TAKE EFFECT SEPTEMBER
    26     1, 2001:
    27             (I)  THE ADDITION OF THE DEFINITION OF "ACTUARIAL
    28         INCREASE FACTOR" IN 71 PA.C.S. § 5102.
    29             (II)  THE ADDITION OF 71 PA.C.S. § 5305.1.
    30             (III)  THE AMENDMENT OR ADDITION OF 71 PA.C.S. §
    20010H0026B1905                 - 134 -

     1         5702(A) INTRODUCTORY PARAGRAPH AND (A.1).
     2         (3)  THE FOLLOWING PROVISIONS SHALL TAKE EFFECT JULY 1,
     3     2002:
     4             (I)  THE AMENDMENT OF 71 PA.C.S. § 5507(B).
     5             (II)  THE AMENDMENT OF 71 PA.C.S. § 5508(B), (C), (E)
     6         AND (F).
     7             (III)  THE AMENDMENT OF 71 PA.C.S. § 5708.1(F).
     8             (IV)  THE AMENDMENT OF 71 PA.C.S. § 5708.2(F).
     9             (V)  THE AMENDMENT OF 71 PA.C.S. § 5708.3(F).
    10             (VI)  THE AMENDMENT OF 71 PA.C.S. § 5708.5(F).
    11             (VII)  THE AMENDMENT OF 71 PA.C.S. § 5938.
    12         (4)  THE ADDITION OF 24 PA.C.S § 8502.2 SHALL TAKE EFFECT
    13     UPON PUBLICATION OF THE NOTICE UNDER SECTION 25.
    14         (5)  THE REMAINDER OF THIS ACT SHALL TAKE EFFECT JULY 1,
    15     2001, OR IMMEDIATELY, WHICHEVER IS LATER.










    A9L24DMS/20010H0026B1905        - 135 -
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