THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY BOYD, AUMENT, BEAR, CUTLER, DENLINGER, EVANKOVICH, EVERETT, GROVE, HICKERNELL, HUTCHINSON, KILLION, MOUL, PETRI, ROSS, SAYLOR, TALLMAN AND LAWRENCE, JUNE 17, 2011

REFERRED TO COMMITTEE ON STATE GOVERNMENT, JUNE 17, 2011  

AN ACT

Amending Title 24 (Education) of the Pennsylvania Consolidated

Statutes, in retirement for school employees, further

providing for definitions, for construction of part, for

mandatory and optional membership, for eligibility points for

retention and reinstatement of service credits, for

creditable nonschool service, for classes of service, for

eligibility for annuities, for eligibility for vesting, for  

eligibility for death benefits, for regular member

contributions for current service, for member contributions

for creditable school service, for return of accumulated

deductions, for maximum single life annuity, for disability

annuities, for member's options, for termination of

annuities, for death benefits, for payment of benefits and

for administrative duties of board; providing for long-term

disability group insurance program; and further providing for  

duties of employers, for rights and duties of school

employees and members, for members' savings account, for

State accumulation account and for payments to school

entities by Commonwealth.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The definitions of "accumulated deductions,"

"basic contribution rate," "eligible annuitants," "final average

salary, "standard single life annuity," "superannuation or

normal retirement age" and "vestee" in section 8102 of Title 24

of the Pennsylvania Consolidated Statutes, amended November 23,

2010 (P.L.1269, No.120), are amended and the section is amended

by adding a definition to read:

§ 8102.  Definitions.

The following words and phrases when used in this part shall

have, unless the context clearly indicates otherwise, the

meanings given to them in this section:

"Accumulated deductions."  The total of pickup contributions,

after-tax contributions, eligible roll-ins made pursuant to

section 8507(l) (relating to rights and duties of school

employees and members) and the contributions paid into the fund

by the member on account of current school service, previous

school service, or creditable nonschool service and the

statutory interest credited on all such contributions.

* * *

"After-tax contributions."  The optional contributions paid

into the fund by the member from the member's salary after all

applicable taxes have been deducted.

* * *

"Basic contribution rate."  For Class T-A, T-B and T-C

service, the rate of 6 1/4%. For Class T-D service, the rate of

7 1/2%. For all active members on the effective date of this

provision who are currently paying 5 1/4% and elect Class T-D

service, the rate of 6 1/2%. For Class T-E service, the rate of

7 1/2%. For Class T-F service, the rate of 10.30%. For Class T-G

service, the rate of 7 1/2%.

* * *

"Eligible annuitants."  All current and prospective

annuitants, other than Class T-G annuitants, with 24 1/2 or more

eligibility points and all current and prospective disability

annuitants. Beginning January 1, 1995, "eligible annuitants"

shall include members with 15 or more eligibility points who

terminated or who terminate school service on or after attaining

superannuation retirement age and who are annuitants with an

effective date of retirement after superannuation age.

* * *

"Final average salary."  The highest average compensation

received as an active member, other than as a Class T-G member, 

during any three nonoverlapping periods of 12 consecutive months

with the compensation for part-time service being annualized on

the basis of the fractional portion of the school year for which

credit is received; except, if the employee was not a member for

three such periods, the total compensation received as an active

member, other than as a Class T-G member, annualized in the case

of part-time service divided by the number of such periods of

membership; in the case of a member with multiple service

credit, the final average salary shall be determined by

reference to compensation received by him as a school employee

or a State employee or both, excluding compensation received for

service performed as a member of Class T-G or Class QB in the

State Employees' Retirement System; and, in the case of a

noneligible member, subject to the application of the provisions

of section 8325.1 (relating to annual compensation limit under

IRC § 401(a)(17)).

* * *

"Standard single life annuity."  For Class T-A, T-B and T-C

credited service of a member, an annuity equal to 2% of the

final average salary, multiplied by the total number of years

and fractional part of a year of credited service of a member.

For Class T-D credited service of a member, an annuity equal to

2.5% of the final average salary, multiplied by the total number

of years and fractional part of a year of credited service. For

Class T-E credited service of a member, an annuity equal to 2%

of the final average salary, multiplied by the total number of

years and fractional part of a year of credited service of a

member. For Class T-F credited service of a member, an annuity

equal to 2.5% of the final average salary, multiplied by the

total number of years and fractional part of a year of credited

service of a member. For Class T-G credited service of a member,

an annuity with a present value equal to the balance of the

members' savings account.

* * *

"Superannuation or normal retirement age."

* * *

"Vestee."  A member with five or more eligibility points who

has terminated school service, has left his accumulated

deductions in the fund and is deferring filing of an application

for receipt of an annuity. For Class T-E and Class T-F members,

a member with ten or more eligibility points who has terminated

school service, has left his accumulated deductions in the fund

and is deferring filing of an application for receipt of an

annuity. For Class T-G members, a member who has terminated

school service, is eligible to leave his accumulated deductions

in the fund and is deferring filing of an application for

receipt of annuity.

Section 2.  Section 8103 of Title 24 is amended by adding a

subsection to read:

§ 8103.  Construction of part.

* * *

(c)  Pension rights.--Notwithstanding any other provision of

law, no collective bargaining agreement nor any arbitration

award between the school employer and its employees or their

collective bargaining representatives shall be construed to

change any of the provisions in this part to require the board

to administer pension or retirement benefits not set forth under

this part or to require action by any other government body

pertaining to pension or retirement benefits or rights of school

employees.

Section 3.  Section 8301(a) of Title 24, amended November 23,

2010 (P.L.1269, No.120), is amended and the section is amended

by adding a subsection to read:

§ 8301.  Mandatory and optional membership.

(a)  Mandatory membership.--Membership in the system shall be

mandatory as of the effective date of employment for all school

employees except the following:

(1)  Any officer or employee of the Department of

Education, State-owned educational institutions, community

colleges, area vocational-technical schools, technical

institutes, or the Pennsylvania State University and who is a

member of the State Employees' Retirement System or a member

of another retirement program approved by the employer.

(2)  Any school employee, other than a school employee

eligible for Class T-G membership, who is not a member of the

system and who is employed on a per diem or hourly basis for

less than 80 full-day sessions or 500 hours in any fiscal

year or annuitant who returns to school service under the

provisions of section 8346(b) (relating to termination of

annuities).

(3)  Any officer or employee of a governmental entity who

subsequent to December 22, 1965 and prior to July 1, 1975

administers, supervises, or teaches classes financed wholly

or in part by the Federal Government so long as he continues

in such service.

(4)  Any part-time school employee who has an individual

retirement account pursuant to the Federal act of September

2, 1974 (Public Law 93-406, 88 Stat. 829), known as the

Employee Retirement Income Security Act of 1974.

* * *

(d)  Other retirement program.--The employer contribution

rate on account of school employees who have elected membership

in another retirement program approved by the employer rather

than membership in Class QB or Class T-G shall be 5%.

Section 4.  Section 8303 of Title 24 is amended by adding a

subsection to read:

§ 8303.  Eligibility points for retention and reinstatement of

service credits.

* * *

(e)  Purchase prohibited.--Notwithstanding any other

provision of this part, a Class T-G member shall not be

permitted to purchase previous school service or creditable

nonschool service except for an approved leave of absence and

activated military service.

Section 5.  Section 8304(a) of Title 24, amended November 23,

2010 (P.L.1269, No.120), is amended to read:

§ 8304.  Creditable nonschool service.

(a)  Eligibility.--An active member or a multiple service

member who is an active member of the State Employees'

Retirement System shall be eligible to receive Class T-C, Class

T-E or Class T-F service credit for creditable nonschool service

and Class T-D, Class T-E or Class T-F service for intervening

military service, provided the member becomes a Class T-D member

pursuant to section 8305.1 (relating to election to become a

Class T-D member) or Class T-F member pursuant to section 8305.2

(relating to election to become a Class T-F member) or 8305

(relating to classes of service), and Class T-G service for

activated military service provided the member is a Class T-G

member under section 8305(f), as set forth in subsection (b)

provided that he is not entitled to receive, eligible to receive

now or in the future, or is receiving retirement benefits for

such service under a retirement system administered and wholly

or partially paid for by any other governmental agency or by any

private employer, or a retirement program approved by the

employer in accordance with section 8301(a)(1) (relating to

mandatory and optional membership), and further provided that

such service is certified by the previous employer and the

manner of payment of the amount due is agreed upon by the

member, the employer, and the board.

* * *

Section 6.  Section 8305 of Title 24 is amended by adding a

subsection to read:

§ 8305.  Classes of service.

* * *

(f)  Class T-G membership.--Notwithstanding any other

provision of this part, a person who first becomes a school

employee and an active member on or after July 1, 2012, shall be

classified as a Class T-G member upon payment of regular member

contributions.

Section 7.  Section 8307(c) of Title 24 is amended to read:

§ 8307.  Eligibility for annuities.

* * *

(c)  Disability annuity.--An active or inactive member not in

Class T-G who has credit for at least five years of service

shall, upon filing of a proper application, be entitled to a

disability annuity if he becomes mentally or physically

incapable of continuing to perform the duties for which he is

employed and qualifies for an annuity in accordance with the

provisions of section 8505(c)(1) (relating to duties of board

regarding applications and elections of members).

Section 8.  Section 8308 of Title 24, amended November 23,

2010 (P.L.1269, No.120), is amended to read:

§ 8308.  Eligibility for vesting.

Any Class T-C or Class T-D member who terminates school

service with five or more eligibility points shall be entitled

to vest his retirement benefits until attainment of

superannuation age. Any Class T-E or Class T-F member who

terminates school service with ten or more eligibility points

shall be entitled to vest his retirement benefits until

attainment of superannuation age. Any Class T-G member who

terminates school service shall be eligible to vest his

retirement benefits until attainment of superannuation age

provided the balance of his members' savings account is greater

than $5,000 as of the date of termination.

Section 9.  Section 8309 of Title 24 is amended to read:

§ 8309.  Eligibility for death benefits.

In the event of the death of a member who is eligible for an

annuity in accordance with section 8307(a) or (b) (relating to

eligibility for annuities) his beneficiary shall be entitled to

a death benefit as provided in section 8347 (relating to death

benefits). In the event of the death of a member not eligible

for an annuity his beneficiary shall receive the accumulated

deductions standing to the member's credit in the fund. In the

event of the death of a Class T-G member, his beneficiary shall

be entitled to a death benefit as provided in section 8347(e).

Section 10.  Section 8321 of Title 24 is amended by adding a

subsection to read:

§ 8321.  Regular member contributions for current service.

* * *

(c)  After-tax contributions.--

(1)  After-tax contributions may be made by Class T-G

active members for current service up to but no more than the

applicable limits under the IRC.

(2)  After-tax contributions shall be made by payroll

deductions and transmitted to the system by the school

employer.

(3)  After-tax contributions shall be treated as taxed at

the time they are made to the system, shall be tracked

separately and shall not be treated as taxable when paid out

to the member.

(4)  After-tax contributions may be changed or stopped by

the member upon notice to the school employer.

Section 11.  Section 8323(a) and (c.1) of Title 24, amended

November 23, 2010 (P.L.1269, No.120), is amended to read:

§ 8323.  Member contributions for creditable school service.

(a)  Previous school service, sabbatical leave and full

coverage.--The contributions to be paid by an active member or

an eligible State employee for credit for reinstatement of all

previously credited school service, school service not

previously credited, sabbatical leave as if he had been in full-

time daily attendance, or full-coverage membership shall be

sufficient to provide an amount equal to the accumulated

deductions which would have been standing to the credit of the

member for such service had regular member contributions been

made with full coverage at the rate of contribution necessary to

be credited as Class T-C service, Class T-D service if the

member is a Class T-D member, Class T-E service if the member is

a Class T-E member [or], Class T-F service if the member is a

Class T-F member or Class T-G service if the member is a Class

T-G member and had such contributions been credited with

statutory interest during the period the contributions would

have been made and during all periods of subsequent school and

State service up to the date of purchase.

* * *

(c.1)  Activated military service leave.--The contributions

to be paid by an active member for credit for all activated

military service leave as if he had been in regular attendance

in the duties for which he is employed shall be sufficient to

provide an amount equal to the accumulated deductions which

would have been standing to the credit of the member for such

service had regular member contributions been made with full

coverage at the rate of contribution necessary to be credited as

Class T-C service or Class T-D service if the member is a Class

T-D member, Class T-E service if the member is a Class T-E

member [or], Class T-F if the member is a Class T-F member or

Class T-G service if the member is a Class T-G member and had

such contributions been credited with statutory interest during

the period the contributions would have been made and during all

periods of subsequent State and school service up to the date of

purchase. In the case of activated military service leave

beginning after the date of enactment of this subsection,

contributions due from the member shall be made as if he is in

regular attendance in the duties for which he is employed.

* * *

Section 12.  Section 8341 of Title 24 is amended to read:

§ 8341.  Return of accumulated deductions.

(a)  Election.--Any member upon termination of service may,

in lieu of all benefits payable under this chapter to which he

may be entitled, elect to receive his accumulated deductions.

(b)  Class T-G.--Any Class T-G member who elects under this

section to receive his accumulated deductions in lieu of all

benefits to which he may be entitled shall forfeit any amounts

credited in accordance with section 8502(m.1) (relating to

administrative duties of board), including any interest credited

thereon.

Section 13.  Sections 8342 and 8344 of Title 24 are amended

by adding subsections to read:

§ 8342.  Maximum single life annuity.

* * *

(d)  Class T-G members.--Upon termination of service, any

Class T-G member who is eligible to receive an annuity pursuant

to the provisions of section 8307(a) and has made an application

in accordance with the provisions of section 8507(f) shall be

entitled to receive a maximum single life annuity with a present

value equal to the balance of the members' savings account

maintained in accordance with section 8523 (relating to members'

savings account) standing to his credit as of his effective date

of retirement.

§ 8344.  Disability annuities.

* * *

(f)  Ineligibility.--Notwithstanding any other provision of

this part, a Class T-G member shall not be eligible to receive a

disability annuity provided under this part, but shall be

eligible to participate in any long-term disability group

insurance program established by the board in accordance with

section 8502.3 (relating to long-term disability group insurance

program).

Section 14.  Section 8345(a) of Title 24, amended November

23, 2010 (P.L.1269, No.120), is amended to read:

§ 8345.  Member's options.

(a)  General rule.--Any Class T-C or Class T-D member who is

a vestee with five or more eligibility points, any Class T-E or

Class T-F member who is a vestee with ten or more eligibility

points, or any other eligible member upon termination of school

service who has not withdrawn his accumulated deductions as

provided in section 8341 (relating to return of accumulated

deductions) may apply for and elect to receive either a maximum

single life annuity, as calculated in accordance with the

provisions of section 8342 (relating to maximum single life

annuity), or a reduced annuity certified by the actuary to be

actuarially equivalent to the maximum single life annuity and in

accordance with one of the following options, except that no

member shall elect an annuity payable to one or more survivor

annuitants other than his spouse or alternate payee of such a

magnitude that the present value of the annuity payable to him

for life plus any lump sum payment he may have elected to

receive is less than 50% of the present value of his maximum

single life annuity. In no event shall a Class T-E or Class T-F

member receive an annual benefit, calculated as of the effective

date of retirement, greater than the member's final average

salary.

(1)  Option 1.--A life annuity to the member with a

guaranteed total payment equal to the present value of the

maximum single life annuity on the effective date of

retirement with the provision that, if, at his death, he has

received less than such present value, the unpaid balance

shall be payable to his beneficiary.

(2)  Option 2.--A joint and survivor annuity payable

during the lifetime of the member with the full amount of

such annuity payable thereafter to his survivor annuitant, if

living at his death.

(3)  Option 3.--A joint and fifty percent (50%) survivor

annuity payable during the lifetime of the member with one-

half of such annuity payable thereafter to his survivor

annuitant, if living at his death.

(4)  Option 4.--Some other benefit which shall be

certified by the actuary to be actuarially equivalent to the

maximum single life annuity, subject to the following

restrictions:

(i)  Any annuity shall be payable without reduction

during the lifetime of the member.

(ii)  The sum of all annuities payable to the

designated survivor annuitants shall not be greater than

one and one-half times the annuity payable to the member.

(iii)  A portion of the benefit may be payable as a

lump sum, except that such lump sum payment shall not

exceed an amount equal to the accumulated deductions

standing to the credit of the member. The balance of the

present value of the maximum single life annuity adjusted

in accordance with section 8342(b) shall be paid in the

form of an annuity with a guaranteed total payment, a

single life annuity, or a joint and survivor annuity or

any combination thereof but subject to the restrictions

of subparagraphs (i) and (ii) of this paragraph. This

subparagraph shall not apply to a Class T-E [or], Class

T-F or Class T-G member.

* * *

Section 15.  Section 8346(a), (a.1), (c) and (d) of Title 24

are amended and the section is amended by adding a subsection to

read:

§ 8346.  Termination of annuities.

(a)  General rule.--If an annuitant, other than a Class T-G

annuitant, returns to school service or enters or has entered

State service and elects multiple service membership, any

annuity payable to him under this part shall cease effective

upon the date of his return to school service or entering State

service and in the case of an annuity other than a disability

annuity the present value of such annuity, adjusted for full

coverage in the case of a joint coverage member who makes the

appropriate back contributions for full coverage, shall be

frozen as of the date such annuity ceases. An annuitant who is

credited with an additional 10% of membership service as

provided in section 8302(b.2) (relating to credited school

service) and who returns to school service, except as provided

in subsection (b), shall forfeit such credited service and shall

have his frozen present value adjusted as if his 10% retirement

incentive had not been applied to his account. In the event that

the cost-of-living increase enacted December 18, 1979, occurred

during the period of such State or school employment, the frozen

present value shall be increased, on or after the member attains

superannuation age, by the percent applicable had he not

returned to service.

(a.1)  Return of benefits.--In the event an annuitant,

including a Class T-G annuitant, whose annuity ceases pursuant

to this section receives any annuity payment, including a lump

sum payment pursuant to section 8345 (relating to member's

options) on or after the date of his return to school service or

entering State service, the annuitant shall return to the board

the amount so received plus statutory interest. The amount

payable shall be certified in each case by the board in

accordance with methods approved by the actuary and shall be

paid in a lump sum within 90 days or in the case of an active

member or a State employee who is an active member of the State

Employees' Retirement System may be amortized with statutory

interest through salary deductions in amounts agreed upon by the

member and the board. The salary deduction amortization plans

agreed to by the member and the board may include a deferral of

payment amounts and statutory interest until the termination of

school service or State service as the board in its sole

discretion decides to allow. The board may limit salary

deduction amortization plans to such terms as the board in its

sole discretion determines. In the case of a State employee who

is an active member of the State Employees' Retirement System,

the agreed upon salary deductions shall be remitted to the State

Employees' Retirement Board, which shall certify and transfer to

the board the amounts paid.

* * *

(c)  Subsequent discontinuance of service.--Upon subsequent

discontinuance of service, such member other than a former

annuitant who had the effect of his frozen present value

eliminated in accordance with subsection (d) [or], a former

disability annuitant or a Class T-G annuitant shall be entitled

to an annuity which is actuarially equivalent to the sum of the

present value as determined under subsection (a) and the present

value of a maximum single life annuity based on years of service

credited subsequent to reentry in the system and his final

average salary computed by reference to his compensation during

his entire period of school and State service.

(d)  Elimination of the effect of frozen present value.--

(1)  An annuitant, other than a Class T-G annuitant, who

returns to school service and earns three eligibility points

by performing credited school service following the most

recent period of receipt of an annuity under this part, or an

annuitant who enters State service and:

(i)  is a multiple service member; or

(ii)  who elects multiple service membership, and

earns three eligibility points by performing credited State

service or credited school service following the most recent

period of receipt of an annuity under this part, and who had

the present value of his annuity frozen in accordance with

subsection (a), shall qualify to have the effect of the

frozen present value resulting from all previous periods of

retirement eliminated, provided that all payments under

Option 4 and annuity payments payable during previous periods

of retirement plus interest as set forth in paragraph (3)

shall be returned to the fund in the form of an actuarial

adjustment to his subsequent benefits or in such form as the

board may otherwise direct.

(2)  Upon subsequent discontinuance of service and the

filing of an application for an annuity, a former annuitant

who qualifies to have the effect of a frozen present value

eliminated under this subsection shall be entitled to receive

the higher of either:

(i)  an annuity (prior to optional modification)

calculated as if the freezing of the former annuitant's

account pursuant to subsection (a) had not occurred,

adjusted by crediting Class T-C school service as Class

T-D service as provided for in section 8305(c) (relating

to classes of service) and further adjusted according to

paragraph (3), provided that a former annuitant of the

system or a former annuitant of the State Employees'

Retirement System who retired under a provision of law

granting additional service credit if termination of

school or State service or retirement occurred during a

specific period of time shall not be permitted to retain

the additional service credit under the prior law when

the annuity is computed for his most recent retirement;

or

(ii)  an annuity (prior to optional modification)

calculated as if the former annuitant did not qualify to

have the effect on the frozen present value eliminated,

unless the former annuitant notifies the board in writing by

the later of the date the application for annuity is filed or

the effective date of retirement that the former annuitant

wishes to receive the lower annuity.

(3)  In addition to any other adjustment to the present

value of the maximum single life annuity that a member may be

entitled to receive that occurs as a result of any other

provision of law, the present value of the maximum single

life annuity shall be reduced by all amounts paid or payable

to him during all previous periods of retirement plus

interest on these amounts until the date of subsequent

retirement. The interest for each year shall be calculated

based upon the annual interest rate adopted for that school

year by the board for the calculation of the normal

contribution rate pursuant to section 8328(b) (relating to

actuarial cost method).

(e)  Class T-G annuitant.--

(1)  If a Class T-G annuitant returns to school service,

any annuity payable to him under this part shall cease

effective upon the date of his return to school service.

(2)  In the event the annuity of a Class T-G annuitant

ceases pursuant to the provisions of this part, the present

value of such annuity at the time of the return to service

shall be transferred to the members' savings account.

(3)  Upon subsequent discontinuance of service, such

Class T-G member shall be entitled to a maximum single life

annuity with a present value equal to the balance of the

members' savings account maintained in accordance with

section 8523 (relating to members' savings account) standing

to his credit as of his effective date of retirement.

Section 16.  Sections 8347, 8349 and 8502 of Title 24 are

amended by adding subsections to read:

§ 8347.  Death benefits.

* * *

(e)  Class T-G members.--In the event of the death of a class

T-G member, other than a Class T-G annuitant, his beneficiary

shall receive the balance of the members' savings account

maintained in accordance with section 8523 (relating to members'

savings account) regardless of whether the member has attained

superannuation retirement age.

§ 8349.  Payment of benefits.

* * *

(d)  De minimus accounts.--A Class T-G member who terminates

school service with a balance of $5,000 or less credited to his

members' savings account as of the date of termination of

service shall receive the balance of the members' savings

account in one lump sum payment as provided in IRC §401(a)(31).

§ 8502.  Administrative duties of board.

* * *

(m.1)  Additional amounts credited to members' savings

account for Class T-G members.--The board shall credit annually

to each Class T-G member's individual members' savings account

5% of such Class T-G member's compensation until date of

termination of service. The amount shall be credited with

statutory interest until date of termination of service, except

in the case of a vestee, who shall have such interest credited

until the effective date of retirement or until the return of

his accumulated deductions, if he so elects.

* * *

Section 17.  Title 24 is amended by adding a section to read:

§ 8502.3.  Long-term disability group insurance program.

(a)  Authority.--The board may sponsor a participant-funded

long-term disability group insurance program to be funded by and

for Class T-G members. The board may administer the program

itself or through any legal entity authorized by law to do so.

The program may also be administered in whole or in part on a

fully insured or self-funded basis at the board's sole

discretion. The board shall have the authority to establish

accounts, adopt any policy statement or promulgate regulations

as may be required for the proper administration of the long-

term disability group insurance program.

(b)  Hold harmless.--Neither the Commonwealth nor the board,

including their respective officers, directors and employees,

shall be liable for any claims, demands, actions or liability of

any nature, including, but not limited to, attorney fees and

court costs, based upon or arising out of the operation of the

program, whether incurred directly or indirectly. The eligible

participants who enroll and participate in the program shall be

deemed to agree, on behalf of themselves and their heirs,

successors and assigns, to hold harmless the Commonwealth and

the board, including their respective officers, directors and

employees, from any claims, demands, actions or liability of any

nature, whether directly or indirectly, including attorney fees

and court costs, based upon or arising out of the operation of

the program.

(c)  No recourse.--Under no circumstances shall the assets of

the Commonwealth or those that comprise the Public School

Employees' Retirement Fund as set forth in section 8522

(relating to Public School Employees' Retirement Fund) be liable

for or used to pay any claims, demands, actions or liability of

any nature, whether directly or indirectly, including, but not

limited to, attorney fees and court costs, based upon or arising

out of the operation of the program.

(d)  Reservation of immunities.--Nothing contained in this

part shall be construed as a waiver of the Commonwealth's or

board's immunities, defenses, rights or actions arising out of

their sovereign status or from the Eleventh Amendment to the

Constitution of the United States.

(e)  Nature of rights.--Any termination or other modification

of the program, including, but not limited to, a change in

benefit options or structure or insurance providers, shall not

give rise to any contractual rights or claims by any eligible

persons or any other person claiming an interest, either

directly or indirectly, in the program. No provision of this

part nor any rule or regulation adopted pursuant to this part

shall create in any person a contractual right in that

provision.

(f)  Additional requirements.--The assets of the fund shall

not be liable or utilized for payment of any expenses or claims

incurred by the long-term disability group insurance program.

The program shall not be subject to the provisions of section

8531 (relating to State guarantee).

Section 18.  Section 8506(g) and (h) are amended to read:

§ 8506.  Duties of employers.

* * *

(g)  Former State employee contributors.--The employer shall,

upon the employment of a former member of the State Employees'

Retirement System who is not an annuitant of the State

Employees' Retirement System, advise such employee of his right

to elect multiple service membership within 365 days of entry

into the system and, in the case any such employee who so elects

has withdrawn his accumulated deductions, require him to restore

his accumulated deductions as they would have been at the time

of his separation had he been a full coverage member, together

with statutory interest for all periods of subsequent State and

school service to date of repayment. The employer shall advise

the board of such election. Notwithstanding any other provision

of this part, notice under this subsection shall not be required

for any Class T-G member.

(h)  Former State employee annuitants.--The employer shall,

upon the employment of an annuitant of the State Employees'

Retirement System who applies for membership in the system,

advise such employee that he may elect multiple service

membership within 365 days of entry into the system and that if

he so elects his annuity from the State Employees' Retirement

System will be discontinued effective upon the date of his

return to school service and, upon termination of school service

and application for an annuity, the annuity will be adjusted in

accordance with section 8346 (relating to termination of

annuities). The employer shall advise the board of such

election. Notwithstanding any other provision of this part,

notice under this subsection shall not be required for any Class

T-G member.

* * *

Section 19.  Section 8507(c), (h) and (k) of Title 24 are

amended and the section is amended by adding a subsection to

read:

§ 8507.  Rights and duties of school employees and members.

* * *

(c)  Multiple service membership.--Any active member, other

than a Class T-G member, who was formerly an active member in

the State Employees' Retirement System may elect to become a

multiple service member. Such election shall occur no later than

365 days after becoming an active member in this system.

* * *

(h)  Vestees attaining superannuation age.--Upon attainment

of superannuation age a vestee shall execute and file within 90

days an application for an annuity. Any application filed after

such 90 day period shall be effective as of the date it is filed

with the board, subject to the provisions of section 8505(g)

(relating to duties of board regarding applications and

elections of members). [If a vestee does not file an application

within seven years after attaining superannuation age, he shall

be deemed to have elected to receive his accumulated deductions

upon attainment of superannuation age.]

* * *

(k)  Disability annuities.--If service of a member, other

than a Class T-G member, is terminated due to his physical or

mental incapacity for the performance of duty, in lieu of an

application and election under subsection (f), an application

for a disability annuity may be executed by him or by a person

legally authorized to act on his behalf.

(l)  Eligible roll-in.--An active Class T-G member may

transfer money received in an eligible rollover distribution to

the members' savings account to the extent allowed by IRC § 402.

The rollover shall be made in a form and manner as determined by

the board, shall be credited to the Class T-G member's

accumulated deductions and shall be separately accounted for by

the board.

Section 20.  Sections 8523 and 8524 of Title 24 are amended

to read:

§ 8523.  Members' savings account.

(a)  Credits to account.--The members' savings account shall

be the ledger account to which shall be credited the amounts of

the pickup contributions made by the employer [and], 

contributions or lump sum payments made by active members in

accordance with the provisions of Chapter 83 (relating to

membership, contributions and benefits) and section 8507(l)

(relating to rights and duties of school employees and members)

and amounts credited in accordance with section 8502(m.1)

(relating to administrative duties of board).

(b)  Interest and transfers from account.--The individual

member accounts to which interest is payable shall be credited

with statutory interest. The accumulated deductions credited to

the account of a member, including amounts credited in

accordance with section 8502(m.1), who dies in service or whose

application for an annuity has been approved shall be

transferred from the members' savings account to the annuity

reserve account provided for in section 8525 (relating to

annuity reserve account).

(c)  Charges to account.--Upon the election of a member to

withdraw his accumulated deductions, the payment of such amount

shall be charged to the members' savings account.

§ 8524.  State accumulation account.

(a)  General rule.--The State accumulation account shall be

the ledger account to which shall be credited all contributions

of the Commonwealth and other employers as well as the earnings

of the fund, except the premium assistance contributions and

earnings thereon in the health insurance account. Valuation

interest shall be allowed on the total amount of such account

less any earnings of the fund credited during the year. The

reserves necessary for the payment of annuities and death

benefits as approved by the board and as provided in Chapter 83

(relating to membership, contributions and benefits) shall be

transferred from the State accumulation account to the annuity

reserve account. At the end of each year the required interest

shall be transferred from the State accumulation account to the

credit of the members' savings account and the annuity reserve

account. The administrative expenses of the board shall be

charged to the State accumulation account. Amounts credited to

the members' savings account as provided in section 8502(m.1)

(relating to administrative duties of board) shall be

transferred from the State accumulation account.

(b)  Refund.--In the event a Class T-G member elects a refund

under section 8341(b)(relating to return of accumulated

deductions) forfeiting the amounts credited in accordance with

section 8502(m.1), the forfeited amount, including interest

thereon, shall be transferred to the State accumulation account.

Section 21.  Section 8535 of Title 24, amended November 23,

2010 (P.L.1269, No.120), is amended to read:

§ 8535.  Payments to school entities by Commonwealth.

(a)  General rule.--For each school year beginning with the

1995-1996 school year, each school entity shall be paid by the

Commonwealth for contributions based upon school service of

active members of the system after June 30, 1995, as follows:

(1)  The Commonwealth shall pay each school entity for

contributions made to the Public School Employees' Retirement

Fund based upon school service of all active members,

including members on activated military service leave, whose

effective dates of employment with their school entities are

after June 30, 1994, and who also had not previously been

employed by any school entity within this Commonwealth an

amount equal to the amount certified by the Public School

Employees' Retirement Board as necessary to provide, together

with the members' contributions, reserves on account of

prospective annuities, supplemental annuities and the premium

assistance program as provided in this part in accordance

with section 8328 (relating to actuarial cost method),

multiplied by the market value/income aid ratio of the school

entity. For no school year shall any school entity receive

less than the amount that would result if the market

value/income aid ratio as defined in section 2501(14.1) of

the Public School Code of 1949 was 0.50.

(2)  The Commonwealth shall pay each school entity for

contributions made to the Public School Employees' Retirement

Fund based upon school service of all active members,

including members on activated military service leave, who

are not described in paragraph (1), one-half of the amount

certified by the Public School Employees' Retirement Board as

necessary to provide, together with the members'

contributions, reserves on account of prospective annuities,

supplemental annuities and the premium assistance program as

provided in this part in accordance with section 8328.

(3)  School entities shall have up to five days after

receipt of the Commonwealth's portion of the employer's

liability to make payment to the Public School Employees'

Retirement Fund. School entities are expected to make the

full payment to the Public School Employees' Retirement Fund

in accordance with section 8327 (relating to payments by

employers) in the event the receipt of the Commonwealth's

portion of the employer's liability is delayed because of

delinquent salary reporting or other conduct by the school

entities.

(b)  Payment above required contribution.--Notwithstanding

any other provision of this title to the contrary, any increase

in payments by the Commonwealth to school entities above the

contributions required by subsection (a) must be forwarded

directly to the Public School Employees' Retirement Fund within

five days. The board shall accept the same and apply it to

offset the current unfunded accrued liability of the fund, if

any, as it deems appropriate.

Section 22.  Nothing in this act which amends or supplements

provisions of 24 Pa.C.S. Pt. IV in relation to requirements for

qualification of the Public School Employees' Retirement System

as a qualified pension plan under section 401(a) of the Internal

Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)), or

any construction of 24 Pa.C.S. Pt. IV, as so amended or

supplemented, or any rules or regulations adopted under 24

Pa.C.S. Pt. IV shall create in any member of the system or in

any other person claiming an interest in the account of any such

member a contractual right, either express or implied nor in any

construction of 24 Pa.C.S. Pt. IV, as so amended or

supplemented, or any rules or regulations adopted under 24

Pa.C.S. Pt. IV. The provisions of 24 Pa.C.S. Pt. IV shall remain

subject to the Internal Revenue Code of 1986, as amended, and

regulations thereunder as the same may hereafter be amended, and

the General Assembly reserves to itself such further exercise of

its legislative power to amend or supplement such provisions as

may from time to time be required in order to maintain the

qualification of such system as a qualified pension plan under

section 401(a) and other applicable provisions of the Internal

Revenue Code of 1986.

Section 23.  Nothing in this act shall be construed or deemed

to imply that, but for the expressed applications of the

limitations on benefits or other requirements under section

401(a) or applicable provisions of the Internal Revenue Code of

1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), those

limitations would not otherwise apply to member of the Public

School Employees' Retirement System and the benefits payable

pursuant to 24 Pa.C.S. Pt. IV.

Section 24.  Nothing in this act shall be construed or deemed

to imply that any interpretation or application of the

provisions of 24 Pa.C.S. Pt. IV or benefits available to members

of the Public School Employees' Retirement System was not in

accordance with the provisions of 24 Pa.C.S. Pt. IV or other

applicable law prior to the effective date of this section.

Section 25.  References in this act to provisions of the

Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1

et seq.), including for this purpose administrative regulations

promulgated thereunder, are intended to include such laws and

regulations as are in effect on the effective date of this

section and as they may hereafter be amended or supplemented or

supplanted by successor provisions.

Section 26.  This act shall be construed and administered in

such a manner that the Public School Employees' Retirement

System will satisfy the requirements necessary to qualify as a

qualified pension plan under section 401(a) and other applicable

provisions of the Internal Revenue Code of 1986 (Public Law

99-514, 26 U.S.C. § 1 et seq.). The rules, regulations and

procedures adopted and promulgated by the Public School

Employees' Retirement Board under 24 Pa.C.S. § 8502(h) may

include those necessary to accomplish the purpose of this

section.

Section 27.  It is the express intent of the General Assembly

that nothing in this act shall be construed to grant to or be

deemed to imply that this act expands, contracts or otherwise

affects any contractual rights, either expressed or implied, or

any other constitutionally protected rights, in the terms and

conditions of the Public School Employees' Retirement System or

other pension or retirement benefits as a school employee,

including, but not limited to, benefits, options, rights or

privileges established by 24 Pa.C.S. Pt. IV for any current or

former school employees.

Section 28.  No school employee otherwise a member of,

eligible to be a member of or having school service credited in

a class of school service other than Class T-G may cancel,

decline or waive membership in such other class of school

service in order to obtain Class T-G service credit, become a

member of Class T-G or elect Class T-G membership.

Section 29.  If any provision of this act or its application

to any person or circumstance is held invalid, the invalidity

shall not affect other provisions or applications of this act

which can be given effect without the invalid provision or

application.

Section 30.  This act shall take effect in 60 days.