SENATE AMENDED

 

PRIOR PRINTER'S NOS. 3730, 3853, 3916, 3928, 4470

PRINTER'S NO.  4476

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

2497

Session of

2010

  

  

INTRODUCED BY D. EVANS, BRIGGS, PARKER, WILLIAMS, GALLOWAY, DePASQUALE, KORTZ, W. KELLER, MYERS, SHAPIRO AND SIPTROTH, MAY 11, 2010

  

  

SENATOR CORMAN, APPROPRIATIONS, IN SENATE, RE-REPORTED AS AMENDED, OCTOBER 13, 2010  

  

  

  

AN ACT

  

1

Amending Titles 24 (Education) and 71 (State Government) of the

2

Pennsylvania Consolidated Statutes, in Title 24, further

3

providing for definitions, for mandatory and optional

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4

membership, for contributions by the Commonwealth, for

5

payments by employers, for actuarial cost method, for

6

additional supplemental annuities, for further additional

7

supplemental annuities, for supplemental annuities commencing

8

1994, for supplemental annuities commencing 1998, for

9

supplemental annuities commencing 2002, for supplemental

10

annuities commencing 2003, for administrative duties of

11

board, for payments to school entities by Commonwealth, for

12

eligibility points for retention and reinstatement of service

13

credits and for creditable nonschool service; providing for

14

election to become a Class T-F member; further providing for

15

classes of service, for eligibility for annuities, for

16

eligibility for vesting, for regular member contributions,

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17

for member contributions for creditable school service, for

18

contributions for purchase of credit for creditable nonschool

19

service, for maximum single life annuity, for disability

20

annuities, for member's options, for duties of board

21

regarding applications and elections of members and for

22

rights and duties of school employees and members; providing

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23

for Independent Fiscal Office study; in Title 71, 

24

establishing an independent fiscal office and making a

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25

related repeal; further providing for definitions; further

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26

providing, for credited State service, for retention and

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27

reinstatement of service credits, for creditable NONSTATE 

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28

nonstate service and for classes of service; providing for

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29

election to become a Class A-4 member; further providing for

30

eligibility for annuities, and for eligibility for vesting,; 

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31

providing for shared risk member contributions for Class A-3

 


1

and Class A-4 service; further providing for waiver of

2

regular member contributions and Social Security integration

3

member contributions, for member contributions for purchase

4

of credit for previous State service or to become a full

5

coverage member, for contributions for the purchase of credit

6

for creditable nonstate service, for contributions by the

7

Commonwealth and other employers, for actuarial cost method, 

8

for maximum single life annuity, for disability annuities and

9

for member's options; providing for payment of accumulated

10

deductions resulting from Class A-3 service; further

11

providing for additional supplemental annuities, for further

12

additional supplemental annuities, for supplemental annuities

13

commencing 1994, for supplemental annuities commencing 1998,

14

for supplemental annuities commencing 2002, for supplemental

15

annuities commencing 2003, for special supplemental

16

postretirement adjustment of 2002, for administrative duties

17

of the board, for duties of board to advise and report to

18

heads of departments and members, for duties of board

19

regarding applications and elections of members, for

20

installment payments of accumulated deductions, for rights

21

and duties of State employees and members, for members'

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22

savings account, for State accumulation account, for State

23

Police Benefit Account, for Enforcement Officers' Benefit

24

Account, for supplemental annuity account and for

25

construction of part; and providing for recertification to

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26

the Secretary of the Budget, Independent Fiscal Office study,

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27

for retirement eligibility of Pennsylvania State Police

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28

officers or members, for a prohibition on the issuance of

29

pension obligation bonds, for holding certain public

30

officials harmless, for construction of calculation or

31

actuarial method, for applicability and for certain

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32

operational provisions.

33

The General Assembly of the Commonwealth of Pennsylvania

34

hereby enacts as follows:

35

Section 1.  The definitions of "basic contribution rate,"

36

"class of service multiplier," "employer," "member's annuity,"

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37

"pickup contributions," "standard single life annuity,"

38

"superannuation or normal retirement age" and "vestee" in

39

section 8102 of Title 24 of the Pennsylvania Consolidated

40

Statutes are amended and the section is amended by adding

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41

definitions to read:

42

§ 8102.  Definitions.

43

The following words and phrases when used in this part shall

44

have, unless the context clearly indicates otherwise, the

45

meanings given to them in this section:

46

* * *

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1

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

2

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

3

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

4

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

5

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

6

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

7

* * *

8

"Class of service multiplier."

9

Class of service

   Multiplier

10

T-A

     .714

11

T-B

     .625

12

T-C

    1.000

13

T-D

    1.000

14

T-E

    1.000

15

T-F

    1.000

16

* * *

17

"Employer."  Any governmental entity directly responsible for

18

the employment and payment of the school employee and charged

19

with the responsibility of providing public education within

20

this Commonwealth, including but not limited to: State-owned

21

colleges and universities, the Pennsylvania State University,

22

community colleges, area vocational-technical schools,

23

intermediate units, the State Board of Education, Scotland

24

School for Veterans' Children, Thaddeus Stevens [State School]

25

College of Technology, and the [Pennsylvania State Oral] Western

26

Pennsylvania School for the Deaf.

27

* * *

28

"Member's annuity."  The single life annuity which is

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29

actuarially equivalent on the effective date of retirement to

30

the sum of the accumulated deductions and the shared risk member

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1

contributions and statutory interest credited on the deductions

2

and contributions standing to the member's credit in the

3

members' savings account.

4

* * *

5

"Pickup contributions."  Regular or joint coverage member

6

contributions and shared risk member contributions which are

7

made by the employer for active members for current service on

8

and after January 1, 1983.

9

* * *

10

"Shared risk contribution rate."  The additional contribution

11

rate that is added to the basic contribution rate for Class T-E

12

and T-F members, as provided for in section 8321(b) (relating to

13

regular member contributions for current service).

14

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

15

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

16

final average salary, multiplied by the total number of years

17

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

18

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

19

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

20

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

21

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

22

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

23

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

24

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

25

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

26

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

27

service of a member.

28

* * *

29

"Superannuation or normal retirement age."

30

Class of service

Age

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1

2

T-A

  

62 or any age upon accrual of 35 eligibility points

3

T-B

62

4

5

6

7

8

T-C and T-D

  

  

  

  

62 or age 60 provided the member has at least 30 eligibility points or any age upon accrual of 35 eligibility points

9

10

11

12

T-E and T-F

  

  

  

65 with accrual of at least three eligibility points or any age upon accrual of 35 eligibility points

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13

14

15

16

17

18

19

20

T-E and T-F

  

  

  

  

  

  

  

65 with accrual of at least three eligibility points or a combination of age and eligibility points totaling 92, provided the member has accrued at least 35 eligibility points

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21

* * *

22

"Total member contribution rate."  The sum of the basic

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contribution rate and the shared risk contribution rate.

24

* * *

25

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

26

has terminated school service, has left his accumulated

27

deductions in the fund and is deferring filing of an application

28

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

29

a member with ten or more eligibility points who has terminated

30

school service, has left his accumulated deductions in the fund

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1

and is deferring filing of an application for receipt of an

2

annuity.

3

Section 2.  Sections 8303(c) and 8304(a) of Title 24 are

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4

amended to read:

5

Section 1.1.  Section 8301(a)(2) of Title 24 is amended to

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6

read:

7

§ 8301.  Mandatory and optional membership.

8

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

9

mandatory as of the effective date of employment for all school

10

employees except the following:

11

* * *

12

(2)  Any school employee who is not a member of the

13

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

14

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

15

year or annuitant who returns to school service under the

16

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

17

annuities).

18

* * *

19

Section 2.  Section 8303(c) of Title 24 is amended and the

20

section is amended by adding a subsection to read:

21

§ 8303.  Eligibility points for retention and reinstatement of

22

service credits.

23

* * *

24

(c)  Purchase of previous creditable service.--Every active

25

member of the system or a multiple service member who is an

26

active member of the State Employees' Retirement System on or

27

after the effective date of this part may purchase credit and

28

receive eligibility points:

29

(1)  as a member of Class T-C, Class T-E or Class T-F for

30

previous creditable school service or creditable nonschool

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1

service; or

2

(2)  as a member of Class T-D for previous creditable 

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3

school service, provided the member elects to become a Class

4

T-D member pursuant to section 8305.1 (relating to election

5

to become a Class T-D member);

6

upon written agreement by the member and the board as to the

7

manner of payment of the amount due for credit for such service;

8

except, that any purchase for reinstatement of service credit

9

shall be for all service previously credited.

10

(d)  Purchase of previous noncreditable service.--Class T-C

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11

and Class T-D members who are active members on the effective

12

date of this subsection shall have three years from the

13

effective date of this subsection to file a written application

14

with the board to purchase any previous noncreditable school

15

service. Class T-C and Class T-D members who are not active

16

members on the effective date of this subsection but who become

17

active members after the effective date of this subsection and

18

Class T-E and class T-F members shall have 365 days from entry

19

into the system to file a written application with the board to

20

purchase any previous noncreditable school service.

21

Section 2.1.  Section 8304(a) of Title 24 is amended to read:

22

§ 8304.  Creditable nonschool service.

23

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

24

member who is an active member of the State Employees'

25

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

26

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

27

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

28

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

29

pursuant to section 8305.1 (relating to election to become a

30

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

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1

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

2

(relating to classes of service), as set forth in subsection (b)

3

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

4

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

5

such service under a retirement system administered and wholly

6

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

7

private employer, or a retirement program approved by the

8

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

9

mandatory and optional membership), and further provided that

10

such service is certified by the previous employer and the

11

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

12

member, the employer, and the board.

13

* * *

14

Section 3.  Section 8305 of Title 24 is amended by adding

15

subsections to read:

16

§ 8305.  Classes of service.

17

* * *

18

(d)  Class T-E membership.--Notwithstanding any other

19

provision, a person who first becomes a school employee and an

20

active member, or a person who first becomes a multiple service

21

member who is a State employee and a member of the State

22

Employees' Retirement System, on or after the effective date of

23

this subsection shall be classified as a Class T-E member upon

24

payment of regular member contributions and the shared risk

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25

contributions.

26

(e)  Class T-F membership.--Notwithstanding any other

27

provision, a person who first becomes a school employee and an

28

active member, or a person who first becomes a multiple service

29

member who is a State employee and a member of the State

30

Employees' Retirement System, on or after the effective date of

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1

this subsection, and who is eligible to become a Class T-E

2

member, shall have the right to elect into Class T-F membership,

3

provided the person elects to become a Class T-F member pursuant

4

to section 8305.2 (relating to election to become a Class T-F

5

member), upon written election filed with the board and payment

6

of regular member contributions and the shared risk

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7

contributions.

8

Section 4.  Title 24 is amended by adding a section to read:

9

§ 8305.2.  Election to become a Class T-F member.

10

(a)  General rule.--A person who first becomes a school

11

employee and an active member, or a person who first becomes a

12

multiple service member who is a State employee and a member of

13

the State Employees' Retirement System, on or after the

14

effective date of this subsection and who is eligible to become

15

a Class T-E member may elect to become a member of Class T-F.

16

(b)  Time for making election.--A member must elect to become

17

a Class T-F member by filing a written election with the board

18

within 45 days of notification by the board that such member is

19

eligible for such election.

20

(c)  Effect of election.--An election to become a Class T-F

21

member shall be irrevocable and shall commence from the original

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22

date of eligibility. A member who elects Class T-F membership

23

shall receive Class T-F service credit on any and all future

24

service, regardless of whether the member terminates service or

25

has a break in service.

26

(d)  Effect of failure to make election.--If a member fails

27

to timely file an election to become a Class T-F member, then

28

the member shall be enrolled as a member of Class T-E and the

29

member shall never be able to elect Class T-F service,

30

regardless of whether the member terminates service or has a

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1

break in service.

2

Section 5.  Sections 8307(b), 8308, 8323(a), (c) and (c.1),

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8324(a), (b), (d), (e) and (f), 8326(a), 8327(a) and (c), 8328,

4

8342(a), 8344(d), 8345(a), 8348.1(f), 8348.2(f), 8348.3(f),

5

8348.5(f), 8348.6(f), 8348.7(f) and 8502(k) of Title 24 are

6

amended to read:

7

Section 5.  Sections 8307(b), 8308, 8321, 8323(a), (c) and

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8

(c.1), 8324 heading, (a), (b), (d), (e) and (f), 8326(a),

9

8327(a) and (c), 8328, 8342(a), 8344(d), 8345(a), 8348.1(f),

10

8348.2(f), 8348.3(f), 8348.5(f), 8348.6(f), 8348.7(f) and

11

8502(k) of Title 24 are amended to read:

12

§ 8307.  Eligibility for annuities.

13

* * *

14

(b)  Withdrawal annuity.--A vestee in Class T-C or Class T-D 

15

with five or more eligibility points or an active or inactive

16

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

17

having five or more eligibility points shall, upon filing a

18

proper application, be entitled to receive an early annuity. A

19

vestee in Class T-E or Class T-F with ten or more eligibility

20

points or an active or inactive Class T-E or Class T-F member

21

who terminates school service having ten or more eligibility

22

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

23

receive an early annuity.

24

* * *

25

§ 8308.  Eligibility for vesting.

26

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

27

service with five or more eligibility points shall be entitled

28

to vest his retirement benefits until attainment of

29

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

30

terminates school service with ten or more eligibility points

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1

shall be entitled to vest his retirement benefits until

2

attainment of superannuation age.

3

§ 8321.  Regular member contributions for current service.

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4

(a)  General.--Regular member contributions shall be made to

5

the fund on behalf of each active member for current service

6

except for any period of current service in which the making of

7

such contributions has ceased solely by reason of any provision

8

of this part relating to the limitations under IRC § 401(a)(17)

9

or 415(b).

10

(b)  Class T-E and Class T-F shared risk contributions.--

11

Commencing with the annual actuarial valuation performed under

12

section 8502(j) (relating to administrative duties of board),

13

for the period ending June 30, 2014, and every three years

14

thereafter, the board shall compare the actual investment rate

15

of return, net of fees, to the annual interest rate adopted by

16

the board for the calculation of the normal contribution rate,

17

based on the market value of assets, for the prior ten-year

18

period. If the actual investment rate of return, net of fees, is

19

less than the annual interest rate adopted by the board by an

20

amount of 1% or more, the shared risk contribution rate of Class

21

T-E and T-F members will increase by .5%. If the actual

22

investment rate of return, net of fees, is equal to or exceeds

23

the annual interest rate adopted by the board, the shared risk

24

contributions rate of Class T-E and T-F members will decrease by

25

.5%. Class T-E and T-F members will contribute at the total

26

member contribution rate in effect when they are hired. The

27

total member contribution rate for Class T-E members shall not

28

be less than 7.5%, nor more than 9.5%. The total member

29

contribution rate for Class T-F members shall not be less than

30

10.3%, nor more than 12.3%. Notwithstanding this subsection, if

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1

the system's actuarial funded status is 100% or more as of the

2

date used for the comparison required under this subsection, as

3

determined in the current annual actuarial valuation, the shared

4

risk contribution rate shall be zero. In the event that the

5

annual interest rate adopted by the board for the calculation of

6

the normal contribution rate is changed during the period used

7

to determine the shared risk contribution rate, the board, with

8

the advice of the actuary, shall determine the applicable rate

9

during the entire period, expressed as an annual rate.

10

(1)  Until the system has a ten-year period of investment

11

rate of return experience following the effective date of

12

this subsection, the look-back period shall begin not earlier

13

than the effective date of this subsection.

14

(2)  For any fiscal year in which the employer

15

contribution rate is lower than the final contribution rate

16

under section 8328(h) (relating to actuarial cost method),

17

the total member contribution rate for Class T-E and T-F

18

members shall be prospectively reset to the basic

19

contribution rate.

20

(3)  There shall be no increase in the member

21

contribution rate if there has not been an equivalent

22

increase to the employer contribution rate over the previous

23

three-year period.

24

§ 8323.  Member contributions for creditable school service.

25

(a)  Previous school service, sabbatical leave and full

26

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

27

an eligible State employee for credit for reinstatement of all

28

previously credited school service, school service not

29

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

30

time daily attendance, or full-coverage membership shall be

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1

sufficient to provide an amount equal to the accumulated

2

deductions which would have been standing to the credit of the

3

member for such service had regular member contributions been

4

made with full coverage at the rate of contribution necessary to

5

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

6

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

7

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

8

Class T-F member, and had such contributions been credited with

9

statutory interest during the period the contributions would

10

have been made and during all periods of subsequent school and

11

State service up to the date of purchase.

12

* * *

13

(c)  Approved leave of absence other than sabbatical leave

14

and activated military service leave.--The contributions to be

15

paid by an active member for credit for an approved leave of

16

absence, other than sabbatical leave and activated military

17

service leave, shall be sufficient to transfer his membership to

18

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

19

to Class T-E if the member is a Class T-E member or to Class T-F

20

if the member is a Class T-F member and further to provide an

21

annuity as a Class T-C member or Class T-D member if the member

22

is a Class T-D member or Class T-E if the member is a Class T-E

23

member or to Class T-F if the member is a Class T-F member for 

24

such additional credited service. Such amount shall be the sum

25

of the amount required in accordance with the provisions of

26

subsection (b) and an amount determined as the sum of the

27

member's basic contribution rate and the normal contribution

28

rate as provided in section 8328 (relating to actuarial cost

29

method) during such period multiplied by the compensation which

30

was received or which would have been received during such

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1

period and with statutory interest during all periods of

2

subsequent school and State service up to the date of purchase.

3

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

4

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

5

military service leave as if he had been in regular attendance

6

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

7

provide an amount equal to the accumulated deductions which

8

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

9

service had regular member contributions been made with full

10

coverage at the rate of contribution necessary to be credited as

11

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

12

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

13

member or Class T-F if the member is a Class T-F member and had

14

such contributions been credited with statutory interest during

15

the period the contributions would have been made and during all

16

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

17

purchase. In the case of activated military service leave

18

beginning after the date of enactment of this subsection,

19

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

20

regular attendance in the duties for which he is employed.

21

* * *

22

§ 8324.  Contributions for purchase of credit for creditable

23

nonschool service and noncreditable school service.

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24

(a)  Source of contributions.--The total contributions to

25

purchase credit as a member of Class T-C, Class T-E or Class T-F 

26

for creditable nonschool service of an active member or an

27

eligible State employee shall be paid either by the member, the

28

member's previous employer, the Commonwealth, or a combination

29

thereof, as provided by law.

30

(b)  Nonintervening military service.--The amount due for the

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1

purchase of credit for military service other than intervening

2

military service shall be determined by applying the member's

3

basic contribution rate plus the normal contribution rate as

4

provided in section 8328 (relating to actuarial cost method) at

5

the time of entry of the member into school service subsequent

6

to such military service to one-third of his total compensation

7

received during the first three years of such subsequent

8

credited school service and multiplying the product by the

9

number of years and fractional part of a year of creditable

10

nonintervening military service being purchased together with

11

statutory interest during all periods of subsequent school and

12

State service to date of purchase. Upon certification of the

13

amount due, payment may be made in a lump sum within 90 days or

14

in the case of an active member or an eligible State employee

15

who is an active member of the State Employees' Retirement

16

System it may be amortized with statutory interest through

17

salary deductions in amounts agreed upon by the member and the

18

board. The salary deduction amortization plans agreed to by

19

members and the board may include a deferral of payment amounts

20

and statutory interest until the termination of school service

21

or State service as the board in its sole discretion decides to

22

allow. The board may limit salary deduction amortization plans

23

to such terms as the board in its sole discretion determines. In

24

the case of an eligible State employee who is an active member

25

of the State Employees' Retirement System, the agreed upon

26

salary deductions shall be remitted to the State Employees'

27

Retirement Board, which shall certify and transfer to the board

28

the amounts paid. Application may be filed for all such military

29

service credit upon completion of three years of subsequent

30

credited school service and shall be credited as Class T-C

- 15 -

 


1

service. In the event that a Class T-E member makes a purchase

2

of credit for such military service, then such service shall be

3

credited as Class T-E service. In the event that a Class T-F

4

member makes a purchase of credit for such military service,

5

then such service shall be credited as Class T-F service.

6

* * *

7

(d)  Other creditable nonschool service.--Contributions on

<--

8

(d)  Other creditable nonschool service[.--] and

<--

9

noncreditable school service.--

10

(1)  Contributions on account of Class T-C, Class T-E or

<--

11

Class T-F credit for creditable nonschool service other than

12

military service shall be determined by applying the member's

13

basic contribution rate plus the normal contribution rate as

14

provided in section 8328 at the time of the member's entry

15

into school service subsequent to such creditable nonschool

16

service to his total compensation received during the first

17

year of subsequent credited school service and multiplying

18

the product by the number of years and fractional part of a

19

year of creditable nonschool service being purchased together

20

with statutory interest during all periods of subsequent

21

school or State service to the date of purchase, except that

22

in the case of purchase of credit for creditable nonschool

23

service as set forth in section 8304(b)(5) (relating to

24

creditable nonschool service) the member shall pay only the

25

employee's share unless otherwise provided by law. Upon

26

certification of the amount due, payment may be made in a

27

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

28

an eligible State employee who is an active member of the

29

State Employees' Retirement System it may be amortized with

30

statutory interest through salary deductions in amounts

- 16 -

 


1

agreed upon by the member and the board. The salary deduction

2

amortization plans agreed to by the members and the board may

3

include a deferral of payment amounts and statutory interest

4

until the termination of school service or State service as

5

the board in its sole discretion decides to allow. The board

6

may limit salary deduction amortization plans to such terms

7

as the board in its sole discretion determines. In the case

8

of an eligible State employee who is an active member of the

9

State Employees' Retirement System, the agreed upon salary

10

deductions shall be remitted to the State Employees'

11

Retirement Board, which shall certify and transfer to the

12

board the amounts paid.

13

(2)  Contributions on account of Class T-E or Class T-F

<--

14

credit for creditable nonschool service other than military

15

service shall be the present value of the full actuarial cost

16

of the increase in the projected superannuation annuity

17

caused by the additional service credited on account of the

18

purchase. Upon certification of the amount due, payment may

19

be made in a lump sum within 90 days or, in the case of an

20

active member or an eligible State employee who is an active

21

member of the State Employees' Retirement System, it may be

22

amortized with statutory interest through salary deductions

23

in amounts agreed upon by the member and the board. The

24

salary deduction amortization plans agreed to by the members

25

and the board may include a deferral of payment amounts and

26

statutory interest until the termination of school service or

27

State service as the board in its sole discretion decides to

28

allow. The board may limit salary deduction amortization

29

plans to the terms as the board in its sole discretion

30

determines. In the case of an eligible State employee who is

- 17 -

 


1

an active member of the State Employees' Retirement System,

2

the agreed upon salary deductions shall be remitted to the

3

State Employees' Retirement Board, which shall certify and

4

transfer to the board the amounts paid.

5

(3)  Contributions on account of Class T-E or Class T-F

6

credit for noncreditable school service other than military

7

service shall be the present value of the full actuarial cost

8

of the increase in the projected superannuation annuity

9

caused by the additional service credited on account of the

10

purchase. Upon certification of the amount due, payment may

11

be made in a lump sum within 90 days or, in the case of an

12

active member or an eligible State employee who is an active

13

member of the State Employees' Retirement System, it may be

14

amortized with statutory interest through salary deductions

15

in amounts agreed upon by the member and the board. The

16

salary deduction amortization plans agreed to by the members

17

and the board may include a deferral of payment amounts and

18

statutory interest until the termination of school service or

19

State service as the board in its sole discretion decides to

20

allow. The board may limit salary deduction amortization

21

plans to the terms as the board in its sole discretion

22

determines. In the case of an eligible State employee who is

23

an active member of the State Employees' Retirement System,

24

the agreed upon salary deductions shall be remitted to the

25

State Employees' Retirement Board, which shall certify and

26

transfer to the board the amounts paid.

27

(e)  Creditable work experience.--Contributions on account of

28

Class T-C, Class T-E or Class T-F credit for creditable work

29

experience pursuant to section 8304(b)(6) shall be the present

30

value of the full actuarial cost of the increase in the

- 18 -

 


1

projected superannuation annuity caused by the additional

2

service credited on account of the purchase of creditable work

3

experience. The amount paid for the purchase of credit for

4

creditable work experience shall not be payable as a lump sum

5

under section 8345(a)(4)(iii) (relating to member's options).

6

Any individual eligible to receive an annuity, excluding an

7

annuity received under the Federal Social Security Act (42

8

U.S.C. § 301 et seq.), in another pension system, other than a

9

military pension system, shall not be eligible to purchase this

10

service.

11

(f)  Creditable maternity leave.--Contributions on account of

12

Class T-C, Class T-E or Class T-F credit for creditable

13

maternity leave pursuant to section 8304(b)(7) shall be

14

determined by applying the member's basic contribution rate plus

15

the normal contribution rate as provided in section 8328 at the

16

time of the member's return to school service to the total

17

compensation received during the first year of subsequent school

18

service and multiplying the product by the number of years and

19

fractional part of a year of creditable service being purchased,

20

together with statutory interest during all periods of

21

subsequent school or State service to the date of purchase. The

22

amount paid for the purchase of credit for creditable maternity

23

leave shall not be eligible for withdrawal as a lump sum under

24

section 8345(a)(4)(iii).

25

§ 8326.  Contributions by the Commonwealth.

26

(a)  Contributions on behalf of active members.--The

27

Commonwealth shall make contributions into the fund on behalf of

28

all active members, including members on activated military

29

service leave, in an amount equal to one-half the amount

30

certified by the board as necessary to provide, together with

- 19 -

 


1

the members' contributions, annuity reserves on account of

2

prospective annuities as provided in this part in accordance

3

with section 8328[(a), (b), (c) and (e)] (relating to actuarial

4

cost method). In case a school employee has elected membership

5

in a retirement program approved by the employer, the

6

Commonwealth shall contribute to such program on account of his

7

membership an amount no greater than the amount it would have

8

contributed had the employee been a member of the Public School

9

Employees' Retirement System.

10

* * *

11

§ 8327.  Payments by employers.

12

(a)  General rule.--Each employer, including the Commonwealth

13

as employer of employees of the Department of Education, State-

14

owned colleges and universities, Thaddeus Stevens [State School] 

15

College of Technology, [Pennsylvania State Oral] Western

16

Pennsylvania School for the Deaf, Scotland School for Veterans'

17

Children, and the Pennsylvania State University, shall make

18

payments to the fund each quarter in an amount equal to one-half

19

the sum of the percentages, as determined under section 8328

20

(relating to actuarial cost method), applied to the total

21

compensation during the pay periods in the preceding quarter of

22

all its employees who were members of the system during such

23

period, including members on activated military service leave.

24

In the event a member on activated military service leave does

25

not return to service for the necessary time or receives an

26

undesirable, bad conduct or dishonorable discharge or does not

27

elect to receive credit for activated military service under

28

section 8302(b.1)(3) (relating to credited school service), the

29

contributions made by the employer on behalf of such member

30

shall be returned with valuation interest upon application by

- 20 -

 


1

the employer.

2

* * *

3

(c)  Payments by employers after June 30, 1995.--After June

4

30, 1995, each employer, including the Commonwealth as employer

5

of employees of the Department of Education, State-owned

6

colleges and universities, Thaddeus Stevens [State School]

7

College of Technology, [Pennsylvania State Oral] Western

8

Pennsylvania School for the Deaf, Scotland School for Veterans'

9

Children and The Pennsylvania State University, shall make

10

payments to the fund each quarter in an amount computed in the

11

following manner:

12

(1)  For an employer that is a school entity, the amount

13

shall be the sum of the percentages as determined under

14

section 8328 applied to the total compensation during the pay

15

periods in the preceding quarter of all employees who were

16

active members of the system during such period, including

17

members on activated military service leave. In the event a

18

member on activated military service leave does not return to

19

service for the necessary time or receives an undesirable,

20

bad conduct or dishonorable discharge or does not elect to

21

receive credit for activated military service under section

22

8302(b.1)(3), the contribution made by the employer on behalf

23

of such member shall be returned with valuation interest upon

24

application by the employer.

25

(2)  For an employer that is not a school entity, the

26

amount computed under subsection (a).

27

(3)  For any employer, whether or not a school entity, in

28

computing the amount of payment due each quarter, there shall

29

be excluded from the total compensation referred to in this

30

subsection and subsection (a) any amount of compensation of a

- 21 -

 


1

noneligible member on the basis of which member contributions

2

have not been made by reason of the limitation under IRC §

3

401(a)(17). Any amount of contribution to the fund paid by

4

the employer on behalf of a noneligible member on the basis

5

of compensation which was subject to exclusion from total

6

compensation in accordance with the provisions of this

7

paragraph shall, upon the board's determination or upon

8

application by the employer, be returned to the employer with

9

valuation interest.

10

§ 8328.  Actuarial cost method.

11

(a)  Employer contribution rate [on behalf of active

12

members].--The amount of the total employer contributions [on

13

behalf of all active members] shall be computed by the actuary

14

as a percentage of the total compensation of all active members

15

during the period for which the amount is determined and shall

16

be so certified by the board. The total employer contribution

17

rate shall be the sum of the final contribution rate as computed

18

in subsection (h) plus the premium assistance contribution rate

19

as computed in subsection (f). The [total] actuarially required 

20

contribution rate [on behalf of all active members] shall

21

consist of the normal contribution rate as defined in subsection

22

(b), the accrued liability contribution rate as defined in

23

subsection (c) and the supplemental annuity contribution rate as

24

defined in subsection (d). Beginning July 1, 2004, the [total] 

25

actuarially required contribution rate shall be modified by the

26

experience adjustment factors as calculated in subsection (e)

27

[but in no case shall it be less than 4% plus the premium

28

assistance contribution rate].

29

(b)  Normal contribution rate.--The normal contribution rate

30

shall be determined after each actuarial valuation. [Until all

<--

- 22 -

 


1

accrued liability contributions have been completed, the] The 

<--

2

normal contribution rate shall be determined, on the basis of

3

the actuarial cost method, an annual interest rate and such

<--

4

mortality and other tables as shall be adopted by the board in

5

accordance with generally accepted actuarial principles, as a

6

level percentage of the compensation of the average new active

7

member, which percentage, if contributed on the basis of his

8

prospective compensation through the entire period of active

9

school service, would be sufficient to fund the liability for

10

any prospective benefit payable to him, in excess of that

11

portion funded by his prospective member contributions[, except

12

for the supplemental benefits provided in sections 8348

13

(relating to supplemental annuities), 8348.1 (relating to

14

additional supplemental annuities), 8348.2 (relating to further

15

additional supplemental annuities), 8348.3 (relating to

16

supplemental annuities commencing 1994), 8348.4 (relating to

17

special supplemental postretirement adjustment), 8348.5

18

(relating to supplemental annuities commencing 1998), 8348.6

19

(relating to supplemental annuities commencing 2002) and 8348.7

20

(relating to supplemental annuities commencing 2003)], excluding

<--

21

the shared risk contributions.

22

(c)  Accrued liability contribution rate.--

23

(1)  For the fiscal [year] years beginning July 1, 2002,

24

and ending June 30, 2011, the accrued liability contribution

25

rate shall be computed as the rate of total compensation of

26

all active members which shall be certified by the actuary as

27

sufficient to fund over a period of ten years from July 1,

28

2002, the present value of the liabilities for all

29

prospective benefits of active members, except for the

30

supplemental benefits provided in sections 8348 (relating to

- 23 -

 


1

supplemental annuities), 8348.1 (relating to additional

2

supplemental annuities), 8348.2 (relating to further

3

additional supplemental annuities), 8348.3 (relating to

4

supplemental annuities commencing 1994), 8348.4 (relating to

5

special supplemental postretirement adjustment), 8348.5

6

(relating to supplemental annuities commencing 1998), 8348.6

7

(relating to supplemental annuities commencing 2002) and

8

8348.7 (relating to supplemental annuities commencing 2003),

9

in excess of the total assets in the fund (calculated by

10

recognizing the actuarially expected investment return

11

immediately and recognizing the difference between the actual

12

investment return and the actuarially expected investment

13

return over a five-year period), excluding the balance in the

14

annuity reserve account, and of the present value of normal

15

contributions and of member contributions payable with

16

respect to all active members on July 1, 2002, during the

17

remainder of their active service.

18

(2)  [Thereafter] For the fiscal years beginning July 1,

19

2003, and ending June 30, 2011, the amount of each annual

20

accrued liability contribution shall be equal to the amount

21

of such contribution for the fiscal year, beginning July 1,

22

2002, except that, if the accrued liability is increased by

23

legislation enacted subsequent to June 30, 2002, but before

24

July 1, 2003, such additional liability shall be funded over

25

a period of ten years from the first day of July, coincident

26

with or next following the effective date of the increase.

27

The amount of each annual accrued liability contribution for

28

such additional legislative liabilities shall be equal to the

29

amount of such contribution for the first annual payment.

30

(3)  Notwithstanding any other provision of law,

- 24 -

 


1

beginning July 1, 2004, and ending June 30, 2011, the

2

outstanding balance of the increase in accrued liability due

3

to the change in benefits enacted in 2001 and the outstanding

4

balance of the net actuarial loss incurred in fiscal year

5

2000-2001 shall be amortized in equal dollar annual

6

contributions over a period that ends 30 years after July 1,

7

2002, and the outstanding balance of the net actuarial loss

8

incurred in fiscal year 2001-2002 shall be amortized in equal

9

dollar annual contributions over a period that ends 30 years

10

after July 1, 2003. For fiscal years beginning on or after

11

July 1, 2004, if the accrued liability is increased by

12

legislation enacted subsequent to June 30, 2003, such

13

additional liability shall be funded in equal dollar annual

14

contributions over a period of ten years from the first day

15

of July coincident with or next following the effective date

16

of the increase.

17

(4)  For the fiscal year beginning July 1, 2011, the

18

accrued liability contribution rate shall be computed as the

19

rate of total compensation of all active members which shall

20

be certified by the actuary as sufficient to fund as a level

21

percentage of compensation over a period of 30 24 years from

<--

22

July 1, 2011, the present value of the liabilities for all

23

prospective benefits calculated as of June 30, 2010,

24

including the supplemental benefits as provided in sections

25

8348, 8348.1, 8348.2, 8348.3, 8348.4, 8348.5, 8348.6 and

26

8348.7, in excess of the actuarially calculated assets in the

27

fund (calculated recognizing all realized and unrealized

28

investment gains and losses each year in level annual

29

installments over a ten-year period). In the event that the

30

accrued liability is increased by legislation enacted

- 25 -

 


1

subsequent to June 30, 2010, such additional liability shall

2

be funded as a level percentage of compensation over a period

3

of ten years from the July 1 second succeeding the date such

4

legislation is enacted.

5

(d)  Supplemental annuity contribution rate.--[Contributions]

6

(1)  For the period of July 1, 2002, to June 30, 2011,

7

contributions from the Commonwealth and other employers

8

required to provide for the payment of the supplemental

9

annuities provided for in sections 8348, 8348.1, 8348.2,

10

8348.4 and 8348.5 shall be paid over a period of ten years

11

from July 1, 2002. The funding for the supplemental annuities

12

commencing 2002 provided for in section 8348.6 shall be as

13

provided in section 8348.6(f). The funding for the

14

supplemental annuities commencing 2003 provided for in

15

section 8348.7 shall be as provided in section 8348.7(f). The

16

amount of each annual supplemental annuities contribution

17

shall be equal to the amount of such contribution for the

18

fiscal year beginning July 1, 2002. [In the event that

19

supplemental annuities are increased by legislation enacted

20

subsequent to June 30, 2002, the additional liability for the

21

increased benefits to be amortized shall be funded in equal

22

dollar annual installments over a period of ten years.]

23

(2)  For fiscal years beginning July 1, 2011,

24

contributions from the Commonwealth and other employers whose

25

employees are members of the system required to provide for

26

the payment of supplemental annuities as provided in sections

27

8348, 8348.1, 8348.2, 8348.3, 8348.4, 8348.5, 8348.6 and

28

8348.7 shall be paid as part of the accrued liability

29

contribution rate as provided for in subsection (c)(4), and

30

there shall not be a separate supplemental annuity

- 26 -

 


1

contribution rate attributable to those supplemental

2

annuities. In the event that supplemental annuities are

3

increased by legislation enacted subsequent to June 30, 2010,

4

the additional liability for the increase in benefits shall

5

be funded as a level percentage of compensation over a period

6

of ten years from the July 1 second succeeding the date such

7

legislation is enacted.

8

(e)  Experience adjustment factor.--

9

(1)  For each year after the establishment of the accrued

10

liability contribution rate for the fiscal year beginning

11

July 1, [2002] 2011, any increase or decrease in the unfunded

12

accrued liability, excluding the gains or losses on the

13

assets of the health insurance account, due to actual

14

experience differing from assumed experience, changes in

15

actuarial assumptions, changes in contributions caused by the

16

final contribution rate being different from the actuarially

17

required contribution rate, active members making shared risk

<--

18

contributions or changes in the terms and conditions of the

19

benefits provided by the system by judicial, administrative

20

or other processes other than legislation, including, but not

21

limited to, reinterpretation of the provisions of this part,

22

shall be amortized [in equal dollar annual contributions] as

23

a level percentage of compensation over a period of [ten] 30 

<--

24

24 years beginning with the July 1 second succeeding the

<--

25

actuarial valuation determining said increases or decreases.

26

(2)  [Notwithstanding the provisions of paragraph (1),

27

for each year after the establishment of the accrued

28

liability contribution rate for the fiscal year beginning

29

July 1, 2003, any increase or decrease in the unfunded

30

accrued liability, excluding the gains or losses on the

- 27 -

 


1

assets of the health insurance account, due to actual

2

experience differing from assumed experience, changes in

3

actuarial assumptions, changes in the terms and conditions of

4

the benefits provided by the system by judicial,

5

administrative or other processes other than legislation,

6

including, but not limited to, reinterpretation of the

7

provisions of this part, shall be amortized in equal dollar

8

annual contributions over a period of 30 years beginning with

9

the July 1 second succeeding the actuarial valuation

10

determining said increases and decreases] (Reserved).

11

(f)  Premium assistance contribution rate.--For each fiscal

12

year beginning with July 1, 1991, the total contribution rate as

13

calculated according to this section shall be increased annually

14

in the full amount certified by the board as necessary to fund

15

the premium assistance program in accordance with section 8509

16

(relating to health insurance premium assistance program),

17

notwithstanding any other provisions of this section.

18

(g)  Temporary application of collared contribution rate.--

19

(1)  The collared contribution rate for each year shall

20

be determined by comparing the actuarially required

21

contribution rate, calculated without regard for the costs

22

added by legislation, to the prior year's final contribution

23

rate.

24

(2)  If, for any of the fiscal years beginning July 1,

25

2011, July 1, 2012, and on or after July 1, 2013, the

26

actuarially required contribution rate, calculated without

27

regard for the costs added by legislation, is more than 3%,

28

3.5% and 4.5%, respectively, of the total compensation of all

29

active members greater than the prior year's final

30

contribution rate, then the collared contribution rate shall

- 28 -

 


1

be applied and be equal to the prior year's final

2

contribution rate increased by 3%, 3.5% and 4.5%,

3

respectively, of total compensation of all active members.

4

Otherwise, and for all other fiscal years, the collared

5

contribution rate shall not be applicable. In no case shall

6

the collared contribution rate be less than 4% of the total

7

compensation of all active members.

8

(h)  Final contribution rate.--

9

(1)  For the fiscal year beginning July 1, 2010, the

10

final contribution rate shall be is 5% of the total

<--

11

compensation of all active members. For each subsequent

12

fiscal year for which the collared contribution rate is

13

applicable, the final contribution rate shall be the collared

14

contribution rate as calculated in subsection (g), plus the

15

costs added by legislation.

16

(2)  For all other fiscal years, the final contribution

17

rate shall be the actuarially required contribution rate,

18

provided that the final contribution rate shall not be less

19

than the normal contribution rate as provided in subsection

20

(b).

21

(i)  Definitions.--As used in this section, the following

22

words and phrases shall have the meanings given to them in this

23

subsection unless the context clearly indicates otherwise:

24

"Actuarially required contribution rate."  The sum of the

25

following:

26

(1)  the normal contribution rate as calculated in

27

subsection (b);

28

(2)  the accrued liability contribution rate as

29

calculated in subsection (c);

30

(3)  the supplemental annuity contribution rate as

- 29 -

 


1

calculated in subsection (d);

2

(4)  the experience adjustment factor as calculated in

3

subsection (e); and

4

(5)  any costs added by legislation enacted prior to the

5

last actuarial valuation.

6

"Costs added by legislation."  The sum, if positive, of all

7

changes in the actuarially required contribution rate resulting

8

from legislation enacted in the year since the last actuarial

9

valuation and not included in the determination of the prior

10

year's final contribution rate, computed as the rate of total

11

compensation of all active members certified by the actuary as

12

sufficient to make the employer normal contributions and

13

sufficient to amortize legislatively created changes in the

14

unfunded actuarial liability as a level percentage of

15

compensation over a period of ten years from the July 1 second

16

succeeding the date of enactment.

17

§ 8342.  Maximum single life annuity.

18

(a)  General rule.--Upon termination of service, any full

19

coverage member who is eligible to receive an annuity pursuant

20

to the provisions of section 8307(a) or (b) (relating to

21

eligibility for annuities) and has made an application in

22

accordance with the provisions of section 8507(f) (relating to

23

rights and duties of school employees and members) shall be

24

entitled to receive a maximum single life annuity attributable

25

to his credited service and equal to the sum of the following

26

single life annuities beginning at the effective date of

27

retirement and, in case the member on the effective date of

28

retirement is under superannuation age, multiplied by a

29

reduction factor calculated to provide benefits actuarially

30

equivalent to an annuity starting at superannuation age:

- 30 -

 


1

Provided however, That on or after July 1, 1976, in the case of

2

any Class T-C, T-D, T-E or T-F member who has attained age 55

<--

3

and has 25 or more eligibility points such sum of single life

4

annuities shall be reduced by a percentage determined by

5

multiplying the number of months, including a fraction of a

6

month as a full month, by which the effective date of retirement

7

precedes superannuation age by 1/4%: Further provided, In no

<--

8

event shall a Class T-E or Class T-F member receive an annual

9

benefit, calculated as of the effective date of retirement,

10

greater than the member's final average salary:

11

(1)  A standard single life annuity multiplied by the

12

class of service multiplier and calculated on the basis of

13

the number of years of credited school service other than

14

concurrent service.

15

(2)  A standard single life annuity multiplied by the

16

class of service multiplier and calculated on the basis of

17

the number of years of concurrent service and multiplied by

18

the ratio of total compensation received in the school system

19

during the period of concurrent service to the total

20

compensation received during such period.

21

(3)  A supplemental annuity such that the total annuity

22

prior to any optional modification or any reduction due to

23

retirement prior to superannuation age shall be at least $100

24

for each full year of credited service.

25

* * *

26

§ 8344.  Disability annuities.

27

* * *

28

(d)  Withdrawal of accumulated deductions.--Upon termination

29

of disability annuity payments in excess of an annuity

30

calculated in accordance with section 8342, a disability

- 31 -

 


1

annuitant who:

2

(1)  is a Class T-C or Class T-D member; or

3

(2)  is a Class T-E or Class T-F member with less than

4

ten eligibility points

5

and who does not return to school service may file an

6

application with the board for an amount equal to the

7

accumulated deductions, shared risk member contributions and

<--

8

statutory interest standing to his credit at the effective date

9

of disability less the total payments received on account of his

10

member's annuity.

11

* * *

12

§ 8345.  Member's options.

13

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

14

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

15

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

16

points, or any other eligible member upon termination of school

17

service who has not withdrawn his accumulated deductions as

18

provided in section 8341 (relating to return of accumulated

19

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

20

single life annuity, as calculated in accordance with the

21

provisions of section 8342 (relating to maximum single life

22

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

23

actuarially equivalent to the maximum single life annuity and in

24

accordance with one of the following options, except that no

25

member shall elect an annuity payable to one or more survivor

26

annuitants other than his spouse or alternate payee of such a

27

magnitude that the present value of the annuity payable to him

28

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

29

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

30

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

<--

- 32 -

 


1

member receive an annual benefit, calculated as of the effective

2

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

3

salary.

4

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

5

guaranteed total payment equal to the present value of the

6

maximum single life annuity on the effective date of

7

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

8

received less than such present value, the unpaid balance

9

shall be payable to his beneficiary.

10

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

11

during the lifetime of the member with the full amount of

12

such annuity payable thereafter to his survivor annuitant, if

13

living at his death.

14

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

15

annuity payable during the lifetime of the member with one-

16

half of such annuity payable thereafter to his survivor

17

annuitant, if living at his death.

18

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

19

certified by the actuary to be actuarially equivalent to the

20

maximum single life annuity, subject to the following

21

restrictions:

22

(i)  Any annuity shall be payable without reduction

23

during the lifetime of the member.

24

(ii)  The sum of all annuities payable to the

25

designated survivor annuitants shall not be greater than

26

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

27

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

28

lump sum, except that such lump sum payment shall not

29

exceed an amount equal to the accumulated deductions

30

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

- 33 -

 


1

present value of the maximum single life annuity adjusted

2

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

3

form of an annuity with a guaranteed total payment, a

4

single life annuity, or a joint and survivor annuity or

5

any combination thereof but subject to the restrictions

6

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

7

subparagraph shall not apply to a Class T-E or Class T-F

8

member.

9

* * *

10

§ 8348.1.  Additional supplemental annuities.

11

* * *

12

(f)  Funding.--The actuary shall annually certify the amount

13

of Commonwealth appropriations for the next fiscal year needed

14

to fund, over a period of ten years from July 1, 2002, the

15

additional monthly supplemental annuity provided for in this

16

section[. The board shall submit the actuary's certification to

17

the Secretary of the Budget on or before November 1 of each

18

year. If, in any year after 1984, the amount certified is

19

disapproved under section 610 of the act of April 9, 1929

20

(P.L.177, No.175), known as The Administrative Code of 1929, as

21

insufficient to meet the funding requirements of this subsection

22

or is not appropriated on or before July 1, the additional

23

supplemental annuity provided for in this section shall be

24

suspended until such time as an amount certified and approved as

25

sufficient is appropriated], which amounts shall be paid during

26

the period beginning July 1, 2002, and ending June 30, 2011. For

27

fiscal years beginning on or after July 1, 2011, the additional

28

liability provided in this section shall be funded as part of

29

the actuarial accrued liability as provided in section 8328

30

(relating to actuarial cost method).

- 34 -

 


1

* * *

2

§ 8348.2.  Further additional supplemental annuities.

3

* * *

4

(f)  Funding.--The actuary shall annually estimate the amount

5

of Commonwealth appropriations for the next fiscal year needed

6

to fund, over a period of ten years from July 1, 2002, the

7

additional monthly supplemental annuity provided for in this

8

section[. The board shall submit the actuary's estimation to the

9

Secretary of the Budget on or before November 1 of each year.

10

If, in any year after 1988, the amount estimated is disapproved

11

under section 610 of the act of April 9, 1929 (P.L.177, No.175),

12

known as The Administrative Code of 1929, as insufficient to

13

meet the funding requirements of this subsection or is not

14

appropriated on or before July 1, the additional supplemental

15

annuity provided for in this section shall be suspended until

16

such time as an amount certified and approved as sufficient is

17

appropriated], which amounts shall be paid during the period

18

beginning July 1, 2002, and ending June 30, 2011. For fiscal

19

years beginning on or after July 1, 2011, the additional

20

liability provided in this section shall be funded as part of

21

the actuarial accrued liability as provided in section 8328

22

(relating to actuarial cost method).

23

* * *

24

§ 8348.3.  Supplemental annuities commencing 1994.

25

* * *

26

(f)  Funding.--[The]

27

(1)  For the period beginning July 1, 2002, and ending

28

June 30, 2011, the additional liability for the increase in

29

benefits provided in this section shall be funded in equal

30

dollar annual installments over a period of ten years

- 35 -

 


1

beginning July 1, 2002.

2

(2)  For fiscal years beginning on or after July 1, 2011,

3

the additional liability provided in this section shall be

4

funded as part of the actuarial accrued liability as provided

5

in section 8328 (relating to actuarial cost method).

6

* * *

7

§ 8348.5.  Supplemental annuities commencing 1998.

8

* * *

9

(f)  Funding.--[The]

10

(1)  For the period beginning July 1, 2002, and ending

11

June 30, 2011, the additional liability for the increase in

12

benefits provided in this section shall be funded in equal

13

dollar annual installments over a period of ten years

14

beginning July 1, 2002.

15

(2)  For fiscal years beginning on or after July 1, 2011,

16

the additional liability provided in this section shall be

17

funded as part of the actuarial accrued liability as provided

18

in section 8328 (relating to actuarial cost method).

19

(3)  Notwithstanding the provisions of section 212 of the

20

act of April 22, 1998 (P.L.1341, No.6A), known as the General

21

Appropriation Act of 1998, regarding payment for cost-of-

22

living increases for annuitants, payments for cost-of-living

23

increases for annuitants shall be made under section 8535

24

(relating to payments to school entities by Commonwealth).

25

* * *

26

§ 8348.6.  Supplemental annuities commencing 2002.

27

* * *

28

(f)  Funding.--[The]

29

(1)  For the period beginning July 1, 2002, and ending

30

June 30, 2011, the additional liability for the increase in

- 36 -

 


1

benefits provided in this section shall be funded in equal

2

dollar annual installments over a period of ten years

3

beginning July 1, 2003.

4

(2)  For fiscal years beginning on or after July 1, 2011,

5

the additional liability provided in this section shall be

6

funded as part of the actuarial accrued liability as provided

7

in section 8328 (relating to actuarial cost method).

8

* * *

9

§ 8348.7.  Supplemental annuities commencing 2003.

10

* * *

11

(f)  Funding.--[The]

12

(1)  For the period beginning July 1, 2002, and ending

13

June 30, 2011, the additional liability for the increase in

14

benefits provided in this section shall be funded in equal

15

dollar annual installments over a period of ten years

16

beginning July 1, 2004.

17

(2)  For fiscal years beginning on or after July 1, 2011,

18

the additional liability provided in this section shall be

19

funded as part of the actuarial accrued liability as provided

20

in section 8328 (relating to actuarial cost method).

21

* * *

22

§ 8502.  Administrative duties of board.

23

* * *

24

(k)  Certification of employer contributions.--The board

25

shall, each year in addition to the itemized budget required

26

under section 8330 (relating to appropriations by the

27

Commonwealth), certify to the employers and the Commonwealth the

28

employer contribution rate expressed as a percentage of members'

29

payroll necessary for the funding of prospective annuities for

30

active members and the annuities of annuitants, and certify the

- 37 -

 


1

rates and amounts of the normal contributions as determined

2

pursuant to section 8328(b) (relating to actuarial cost method),

3

accrued liability contributions as determined pursuant to

4

section 8328(c), supplemental annuities contribution rate as

5

determined pursuant to section 8328(d) [and], the experience

6

adjustment factor as determined pursuant to section 8328(e)

7

[and], premium assistance contributions as determined pursuant

8

to section 8328(f), the costs added by legislation as determined

9

pursuant to section 8328(i), the actuarial required contribution

10

rate as determined pursuant to section 8328(i), the collared

11

contribution rate as determined pursuant to section 8328(g) and, 

<--

12

the final contribution rate as determined pursuant to section

13

8328(h) and the shared risk contribution rate as determined

<--

14

under section 8321(b) (relating to regular member contributions

15

for current service), which shall be paid to the fund and

16

credited to the appropriate accounts. These certifications shall

17

be regarded as final and not subject to modification by the

18

[Budget Secretary] Secretary of the Budget.

19

* * *

20

Section 6.  Section 8505 of Title 24 is amended by adding a

21

subsection to read:

22

§ 8505.  Duties of board regarding applications and elections of

23

members.

24

* * *

25

(l)  Notification of Class T-F membership.--The board shall

26

inform any eligible school employee of the right to elect Class

27

T-F membership.

28

Section 7 6.1.  Sections 8507(f) and (g) and 8535(3) of Title

<--

29

24 are amended to read:

30

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

- 38 -

 


1

* * *

2

(f)  Termination of service.--Each member who terminates

3

school service and who is not then a disability annuitant shall

4

execute on or before the date of termination of service a

5

written application, duly attested by the member or his legally

6

constituted representative, electing to do one of the following:

7

(1)  Withdraw his accumulated deductions.

8

(2)  Vest his retirement rights and if he is a joint

9

coverage member, and so desires, elect to become a full

10

coverage member and agree to pay within 30 days of the date

11

of termination of service the lump sum required.

12

(3)  Receive an immediate annuity, if eligible, and may,

13

if he is a joint coverage member, elect to become a full

14

coverage member and agree to pay within 30 days of date of

15

termination of service the lump sum required.

16

(g)  Vesting of retirement rights.--If a member elects to

17

vest his retirement rights, he shall nominate a beneficiary by

18

written designation filed with the board and he may anytime

19

thereafter withdraw the accumulated deductions standing to his

20

credit or[, if he has five or more eligibility points,] apply

21

for an annuity if eligible as provided in section 8307(a) or (b)

22

(relating to eligibility for annuitants).

23

* * *

24

§ 8535.  Payments to school entities by Commonwealth.

25

For each school year beginning with the 1995-1996 school

26

year, each school entity shall be paid by the Commonwealth for

27

contributions based upon school service of active members of the

28

system after June 30, 1995, as follows:

29

* * *

30

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

- 39 -

 


1

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

2

liability to make payment to the Public School Employees'

3

Retirement Fund. School entities are expected to make the

4

full payment to the Public School Employees' Retirement Fund

5

in accordance with section 8327 (relating to payments by

6

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

7

portion of the employer's liability is delayed because of

8

delinquent salary reporting or other conduct by the school

9

entities.

10

Section 7 6.2.  Title 24 is amended by adding a section to

<--

11

read:

12

§ 8536.  Independent Fiscal Office study.

13

The Independent Fiscal Office shall study and analyze the

14

implementation of shared risk contributions under section

15

8321(b) (relating to regular member contributions for current

16

service) and its impact on the system. The study shall be

17

completed by December 31, 2015, and shall be transmitted to the

18

Appropriations Committee and the Finance Committee of the Senate

19

and the Appropriations Committee and the Finance Committee of

20

the House of Representatives and to the Governor.

21

Section 7.  Title 71 is amended by adding a part to read:

<--

22

PART V

23

BOARDS AND OFFICES

24

Chapter

25

41.  Independent Fiscal Office

26

CHAPTER 41

27

INDEPENDENT FISCAL OFFICE

28

4101.  Scope.

29

4102.  Definitions.

30

4103.  Office established.

- 40 -

 


1

4104.  Duties of office.

2

4105.  Revenue estimates.

3

4106.  Budget information.

4

4107.  Expenditures.

5

4108.  Revenue conference.

6

4109.  Access to information.

7

4110.  Selection and organization committee.

8

4111.  Appointment.

9

4112.  Powers and duties of director.

10

4113.  Records.

11

4114.  Repeal.

12

§ 4101.  Scope.

13

This chapter relates to independent fiscal estimates.

14

§ 4102.  Definitions.

15

The following words and phrases when used in this chapter

16

shall have the meanings given to them in this section unless the

17

context clearly indicates otherwise:

18

"Committee."  The Independent Fiscal Office Selection and

19

Organization Committee.

20

"Commonwealth agency."  Any office, department, authority,

21

board, multistate agency or commission of the executive branch.

22

The term includes:

23

(1)  The Office of the Governor.

24

(2)  The Office of Attorney General, the Department of

25

the Auditor General and the Treasury Department.

26

(3)  An independent agency as defined in 62 Pa.C.S. § 103

27

(relating to definitions).

28

(4)  A State-affiliated entity as defined in 62 Pa.C.S. §

29

103 (relating to definitions).

30

(5)  The General Assembly.

- 41 -

 


1

(6)  The Judiciary.

2

"Director."  The Director of the Independent Fiscal Office.

3

"Office."  The Independent Fiscal Office established in

4

section 4103 (relating to office established).

5

§ 4103.  Office established.

6

There is established a nonpartisan Independent Fiscal Office

7

as an independent agency.

8

§ 4104.  Duties of office.

9

(a)  Mandatory.--The office shall:

10

(1)  Prepare revenue estimates to include Federal funds,

11

State revenues and funds from other resources, including any

12

projected revenue surplus or deficit for a given fiscal year,

13

as provided under section 4105 (relating to revenue

14

estimates).

15

(2)  By November 15 of each year, provide an assessment

16

of the State's current fiscal condition and a projection of

17

what the fiscal condition will be during the next five years.

18

The assessment shall take into account the state of the

19

economy, demographics, revenues and expenditures.

20

(3)  Develop performance measures for executive level

21

programs and departments and evaluate performance measures

22

and results as promulgated and reported by executive level

23

departments. Performance measurements shall be outcome-based

24

and include, but not be limited to, activity cost analysis,

25

measures of status improvement of recipient populations,

26

economic outcomes and performance benchmarks against similar

27

State programs.

28

(4)  Provide an analysis, including economic impact, of

29

all tax and revenue proposals submitted by the Governor or

30

the Office of the Budget.

- 42 -

 


1

(5)  Study and analyze the existing sales and use tax law

2

and propose recommendations to the Governor and the General

3

Assembly for amending the tax to:

4

(i)  eliminate obsolete and unnecessary provisions;

5

(ii)  expand the tax base as necessary;

6

(iii)  ensure a competitive economic market in this

7

Commonwealth; and

8

(iv)  protect the stability of the Commonwealth's

9

budget.

10

(6)  Establish an Internet website.

11

(7)  Study and analyze the impact of shared risk

12

contributions under 24 Pa.C.S. § 8321(b) (relating to regular

13

member contributions for current service) and section 5501.1

14

(relating to shared risk member contributions for Class A-3

15

and Class A-4 service).

16

(b)  Discretionary.--The office may:

17

(1)  Develop and use econometric models to annually

18

forecast State revenues and update the models. The office

19

shall make the equations of a model and any historic

20

databases related thereto available to the chairman and

21

minority chairman of the Appropriations Committee of the

22

Senate, the chairman and minority chairman of the

23

Appropriations Committee of the House of Representatives, the

24

Majority Leader and Minority Leader of the Senate and the

25

Majority Leader and Minority Leader of the House of

26

Representatives.

27

(2)  Provide an analysis of the executive budget,

28

including budgetary projections, economic outlook and

29

economic impact. The budget analysis may include performance

30

recommendations to secure greater efficiency and economy.

- 43 -

 


1

(3)  Provide an assessment of the Pennsylvania economy

2

and the national economy and the impact of the existing or

3

emerging State or national economic trends on revenue

4

performance for the current year and the forecasted or

5

projected revenue collections for the budget year and the

6

succeeding year.

7

§ 4105.  Revenue estimates.

8

(a)  Initial revenue estimate.--By May 1, the office shall

9

submit to the General Assembly an initial revenue estimate for

10

the next fiscal year.

11

(b)  Official revenue estimate.--

12

(1)  By June 15 of each year the office shall submit an

13

official revenue estimate for the next fiscal year.

14

(2)  A revenue estimate submitted under this section

15

shall be considered by the Governor and the General Assembly

16

as the amount of revenue which may be considered for the

17

General Appropriation Act for the ensuing fiscal year unless

18

the General Assembly or the Governor determines that revenues

19

are greater than or less than the estimate provided under

20

this section. The office may amend the revenue estimate under

21

this section if changes in law affecting revenues and

22

receipts are enacted or proposed to be enacted with the

23

annual State budget or unless significant changes in economic

24

assumptions occur prior to June 30. The office shall submit

25

the amended revenue estimate to the General Assembly within

26

ten days of the change.

27

(3)  The office shall publish the methodology used to

28

develop revenue estimates.

29

(c)  Information.--The office shall provide the chairman and

30

minority chairman of the Appropriations Committee of the Senate,

- 44 -

 


1

the chairman and minority chairman of the Appropriations

2

Committee of the House of Representatives and the Secretary of

3

the Budget all data, assumptions or econometric models used to

4

develop projections and revenue estimates.

5

(d)  Required information.--

6

(1)  A revenue estimate submitted by the office under

7

subsection (b) shall include:

8

(i)  Projected revenue collections by specific tax or

9

revenue source, including Federal funds, the General

10

Fund, the Lottery Fund and the Motor License Fund.

11

(ii)  All data, assumptions and econometric models

12

used to develop a revenue estimate.

13

(iii)  Any projected revenue surplus or deficit for

14

the current fiscal year.

15

(2)  A revenue estimate shall be based on existing law

16

and tax policy and existing or emerging State or national

17

economic trends.

18

(e)  Proposed change in law.--The office shall prepare a

19

revenue estimate of any change in law affecting revenues and

20

receipts, including increases in regulatory fees, proposed or

21

considered as part of the annual State budget. If the proposed

22

change in law will have a fiscal impact in excess of $10,000,000

23

in any fiscal year, the estimate shall be prepared on the basis

24

of assumptions that estimate the probable behavioral responses

25

of taxpayers, businesses and other persons to the proposed

26

changes and shall include a statement identifying those

27

assumptions. The information may be used to revise the revenue

28

estimate under subsection (a).

29

(f)  Department of Revenue.--The Department of Revenue in

30

conjunction with the Secretary of the Budget shall make revenue

- 45 -

 


1

estimates for the use of the Governor in preparing the budget.

2

(g)  Governor.--The Governor shall certify that any

3

appropriation bill does not cause total appropriations to exceed

4

revenues plus any unappropriated surplus as provided in section

5

618 of the act of April 9, 1929 (P.L.177, No.175), known as The

6

Administrative Code of 1929.

7

§ 4106.  Budget information.

8

The office shall be notified and shall attend any briefings

9

provided by the Governor or the Secretary of the Budget under

10

section 619 of the act of April 9, 1929 (P.L.177, No.175), known

11

as The Administrative Code of 1929.

12

§ 4107.  Expenditures.

13

(a)  Expenditure reports.--Commonwealth agencies shall make

14

monthly expenditure data available to the office. The data shall

15

be provided within seven days after the end of each month. The

16

monthly data shall include a summary of the last monthly

17

submission. The data shall be provided in finished reports or

18

electronically, as provided in the act of April 9, 1929

19

(P.L.177, No.175), known as The Administrative Code of 1929. The

20

data shall be provided by fund, by appropriation, by department

21

and by organization within each department and shall include:

22

(1)  Number of filled personnel positions and their cost.

23

(2)  Itemized personnel vacancies and their cost.

24

(3)  New positions created and their cost.

25

(4)  Wage and overtime costs.

26

(5)  Allotments and expenditures for itemized personnel

27

expenses.

28

(6)  Allotments and expenditures for itemized operating

29

expenses.

30

(7)  Allotment and expenditures for itemized fixed

- 46 -

 


1

assets.

2

(8)  The rate of expenditures in appropriations for major

3

subsidy and grant programs during the month.

4

(b)  Revenue reports.--The Governor shall direct that monthly

5

revenue reports be submitted to the office. The revenue reports

6

shall show the actual collection of revenue itemized by source

7

and a comparison of the actual collections with estimated

8

collections for each month. The comparison shall include an

9

analysis of any change in collection patterns which will cause a

10

shortfall or overrun on annual estimates of more than 1%.

11

(c)  Other revenue data.--Commonwealth agencies shall cause

12

to be prepared any other revenue data as may be requested from

13

time to time by the office.

14

(d)  Electronic access.--Except for information that is

15

confidential pursuant to statute, the office shall have access

16

to all information available under this section on inquiry-only

17

screens through an integrated central computer system.

18

§ 4108.  Revenue conference.

19

By January 31 of each year, the office shall convene a

20

meeting with the Secretary of the Budget, the Secretary of

21

Revenue and the chairman and minority chairman of the

22

Appropriations Committee of the Senate and the chairman and

23

minority chairman of the Appropriations Committee of the House

24

of Representatives to discuss the following:

25

(1)  The Pennsylvania economy and the national economy

26

and the impact of the economic trends on revenue performance

27

for the budget year and the succeeding year.

28

(2)  Current year-to-date revenue collections by specific

29

tax or revenue source, including Federal funds, the General

30

Fund, the Lottery Fund and the Motor License Fund and

- 47 -

 


1

variations that may be occurring in the revenue estimate

2

submitted under section 4105(a) (relating to revenue

3

estimates).

4

(3)  Any statutory or tax policy changes that may be

5

recommended by the Governor or the General Assembly for the

6

next succeeding fiscal year.

7

§ 4109.  Access to information.

8

(a)  Agencies.--The director is authorized to secure

9

information, data, expense information, estimates and statistics

10

directly from a Commonwealth agency or a political subdivision.

11

All Commonwealth agencies and political subdivisions shall

12

furnish the director with all reports of expenditure for each

13

agency and any other available material or data which the

14

director determines to be necessary in the performance of the

15

duties of the office, other than material the disclosure of

16

which would be a violation of law. The director is also

17

authorized, upon agreement with the head of any Commonwealth

18

agency or political subdivision, to utilize the services,

19

facilities and personnel of the agency with or without

20

reimbursement.

21

(b)  Office of the Budget.--In carrying out the duties and

22

functions of the office, the director is authorized to obtain

23

information, data, estimates and statistics developed by the

24

Office of the Budget and all Commonwealth agencies. The Office

25

of the Budget shall submit to the office copies of final agency

26

budget requests at the same time they are submitted to the

27

General Assembly under the act of April 9, 1929 (P.L.177,

28

No.175), known as The Administrative Code of 1929.

29

(c)  Computer database.--In order to carry out its duties

30

under this chapter, the office shall have access to any

- 48 -

 


1

computerized database of a State agency that is required to aid

2

the office in the performance of its duties, except that any

3

statutory requirements regarding privacy of individuals' records

4

shall be observed in providing access.

5

(d)  Daily revenue data.--

6

(1)  The Secretary of Revenue and the Secretary of the

7

Budget shall post revenue collection data for each deposit

8

day and make the information available to the office and the

9

chairman and minority chairman of the Appropriations

10

Committee of the Senate and the chairman and minority

11

chairman of the Appropriations Committee of the House of

12

Representatives.

13

(2)  The Governor, the Attorney General, the Auditor

14

General and the State Treasurer shall cause to be prepared

15

any other revenue data as may be requested by the office.

16

(e)  Tax information.--For the purposes of carrying out its

17

official duties under section 4105 (relating to revenue

18

estimates) and notwithstanding any other law of this

19

Commonwealth, the office shall be authorized to access any

20

information in the possession of the Department of Revenue that

21

is obtained from tax payments, returns or reports, including

22

adjustments or corrections made by the department. The

23

information accessed under this section shall be confidential

24

except for official purposes and any person divulging the

25

information shall be subject to section 731 of the act of April

26

9, 1929 (P.L.343, No.176), known as The Fiscal Code.

27

(f)  Civil action.--If information is not made available by a

28

Commonwealth agency or political subdivision within a reasonable

29

time, the director may make a written request to the agency

30

head, stating the authority to receive the information. The

- 49 -

 


1

agency head shall have 15 days to respond. If the information is

2

not provided within 15 days of the receipt of the director's

3

request, the director may bring a civil action to require the

4

agency head to provide the information.

5

§ 4110.  Selection and organization committee.

6

(a)  Selection and organization committee.--The Independent

7

Fiscal Office Selection and Organization Committee is

8

established to organize the office and select the director of

9

the office. The committee shall consist of the following:

10

(1)  The chairman and minority chairman of the

11

Appropriations Committee of the Senate and the chairman and

12

minority chairman of the Appropriations Committee of the

13

House of Representatives.

14

(2)  The Majority Leader and the Minority Leader of the

15

Senate and the Majority Leader and the Minority Leader of the

16

House of Representatives.

17

(3)  The President pro tempore of the Senate and the

18

Speaker of the House of Representatives.

19

(b)  Duties of committee.--By January 15, 2011, the selection

20

and organization committee shall deliberate the following:

21

(1)  The procedures to be adopted to select the director

22

of the office.

23

(2)  The operational budget for the office.

24

§ 4111.  Appointment.

25

(a)  Director.--The office shall be headed by a director

26

appointed by the selection and organization committee by May 30,

27

2011. The appointment shall be made without regard to political

28

affiliation and solely on the basis of fitness to perform the

29

duties of the office based on qualifications published by the

30

selection and organization committee.

- 50 -

 


1

(b)  Deputy director.--The director shall appoint a deputy

2

director who shall perform such duties as assigned by the

3

director and who shall during the absence or incapacity of the

4

director or a vacancy act as the director.

5

(c)  Term.--The term of office of the director shall be six

6

years. An individual appointed as director to fill a vacancy

7

prior to the expiration of a term shall serve only for the

8

unexpired portion of that term. An individual serving as

9

director at the expiration of a term may continue to serve until

10

a successor is appointed.

11

(d)  Removal.--The director may be removed by a concurrent

12

resolution passed by the Senate and the House of

13

Representatives.

14

§ 4112.  Powers and duties of director.

15

(a)  Personnel.--The director shall appoint and fix the

16

compensation of personnel as necessary to carry out the duties

17

and functions of the office. All personnel of the office shall

18

be appointed without regard to political affiliation and solely

19

on the basis of their fitness to perform their duties.

20

(b)  Experts and consultants.--In carrying out the duties and

21

functions of the office, the director may procure the temporary

22

or intermittent services of attorneys, experts or consultants or

23

organization thereof by contract.

24

§ 4113.  Records.

25

The office shall be a legislative agency for purpose of the

26

act of February 14, 2008 (P.L.6, No.3), known as the Right-to-

27

Know Law.

28

§ 4114.  Repeal.

29

(a)  Intent.--The General Assembly declares that the repeal

30

under subsection (b) is necessary to effectuate the purposes of

- 51 -

 


1

this chapter.

2

(b)  Provision.--Section 618 of the act of April 9, 1929

3

(P.L.177, No.175), known as The Administrative Code of 1929, is

4

repealed to the extent it is inconsistent with this chapter.

5

Section 7.1.  The definitions of "class of service

6

multiplier," "final average salary," "superannuation age" 

<--

7

"member's annuity," "pickup contributions," "superannuation

<--

8

age," "total accumulated deductions" and "vestee" in section

9

5102 of Title 71 are amended and the section is amended by

<--

10

adding definitions to read:

11

§ 5102.  Definitions.

12

The following words and phrases as used in this part, unless

13

a different meaning is plainly required by the context, shall

14

have the following meanings:

15

* * *

16

"Class of service multiplier."

17

Class of Service

  

Multiplier

  

18

A

  

1

  

19

20

21

22

23

24

25

26

AA

  

  

  

  

  

  

  

for all purposes  except calculating regular member contributions on compensation paid prior to January 1, 2002

   1.25

  

27

28

29

30

AA

  

  

  

for purposes of

calculating regular member contributions   

  

  

  

  

  

- 52 -

 


1

2

3

  

  

  

on compensation

paid prior to January 1, 2002

  

  

1

4

5

6

7

8

9

10

11

12

A-3

  

  

  

  

  

  

  

  

for all purposes except the calculation of regular member contributions and contributions for creditable nonstate service

  

  

  

  

  

  

  

  

1

  

13

14

15

16

17

18

19

20

A-3

  

  

  

  

  

  

  

for purposes of calculating regular member contributions and contributions for creditable nonstate service

  

  

  

  

  

  

  

   1.25

  

21

22

23

24

25

A-4

  

  

  

  

for all purposes except the calculation of regular member contributions

  

  

  

  

   1.25

  

26

27

28

29

A-4

  

  

  

for purposes of calculating regular member contributions

  

  

  

   1.86

  

30

B

  

    .625

  

- 53 -

 


1

C

  

1

  

2

D

  

   1.25

  

3

4

D-1

  

prior to January 1, 1973

  

   1.875

  

5

6

7

D-1

  

  

on and subsequent to January 1, 1973

  

  

   1.731

  

8

9

D-2

  

prior to January 1, 1973

  

 2.5

  

10

11

12

D-2

  

  

on and subsequent to   January 1, 1973

  

  

   1.731

  

13

14

D-3

  

prior to January 1, 1973

  

  3.75

  

15

16

17

18

19

20

21

22

23

D-3

  

  

  

  

  

  

  

  

on and   subsequent to   January 1, 1973

  

  

   1.731

except prior to December 1, 1974 as applied to any additional legislative   compensation as an officer of the General Assembly

24

  

  

  3.75

  

25

26

27

28

29

30

D-4

  

  

  

  

  

for all purposes

except calculating regular member contributions   on compensation

  

  

  

  

  

  

  

- 54 -

 


1

2

  

  

paid prior to

July 1, 2001

  

  1.5

3

4

5

6

7

8

9

D-4

  

  

  

  

  

  

for purposes of   calculating regular member   contributions on compensation   paid prior to  July 1, 2001

  

  

  

  

  

  

1

  

10

11

12

13

E, E-1

  

  

  

prior to January 1, 1973

  

2

for each of the first ten years of judicial service, and

14

15

16

17

  

  

  

  

  

  1.5

for each subsequent year  of judicial service

18

19

20

21

E, E-1

  

  

  

on and  subsequent to   January 1, 1973

  

  

   1.50

for each of the first ten years of judicial  service and

22

23

E-2

  

prior to September 1 1973

  

  1.5

  

24

25

26

27

E-2

  

  

  

on and subsequent to September 1, 1973

  

  

  

    1.125

  

28

G

  

    0.417

  

29

H

  

    0.500

  

30

I

  

    0.625

  

- 55 -

 


1

J

  

    0.714

  

2

K

  

    0.834

  

3

L

  

   1.000

  

4

M

  

   1.100

  

5

N

  

   1.250

  

6

7

8

9

T-C (Public

School

Employees'

Retirement Code)

  

1

  

10

11

12

13

T-E (Public 

School

Employees'

Retirement Code)

  

1

  

14

15

16

17

T-F (Public 

School

Employees'

Retirement Code)

  

1

  

18

* * * 

19

"Final average salary."  The highest average compensation

20

received as a member during any three nonoverlapping periods of

21

four consecutive calendar quarters during which the member was a

22

State employee, with the compensation for part-time service

23

being annualized on the basis of the fractional portion of the

24

year for which credit is received; except if the employee was

25

not a member for three nonoverlapping periods of four

26

consecutive calendar quarters, the total compensation received

27

as a member, annualized in the case of part-time service,

28

divided by the number of nonoverlapping periods of four

29

consecutive calendar quarters of membership; in the case of a

30

member with multiple service, the final average salary shall be

- 56 -

 


1

determined on the basis of the compensation received by him as a

2

State employee or as a school employee, or both; in the case of

3

a member with Class A-3 or Class A-4 service and service in one

4

or more other classes of service, the final average salary shall

5

be determined on the basis of the compensation received by him

6

in all classes of State service; and, in the case of a member

7

who first became a member on or after January 1, 1996, the final

8

average salary shall be determined as hereinabove provided but

9

subject to the application of the provisions of section

10

5506.1(a) (relating to annual compensation limit under IRC §

11

401(a)(17)).

12

* * *

13

"Member's annuity."  The single life annuity which is

<--

14

actuarially equivalent, at the effective date of retirement, to

15

the sum of the regular accumulated deductions, shared risk

16

accumulated deductions, the additional accumulated deductions

17

and the social security integration accumulated deductions

18

standing to the member's credit in the members' savings account.

19

* * *

20

"Pickup contributions."  Regular or joint coverage member

21

contributions, shared risk member contributions, social security

22

integration contributions and additional member contributions

23

which are made by the Commonwealth or other employer for active

24

members for current service on and after January 1, 1982.

25

* * *

26

"Shared risk accumulated deductions."  The total of the

27

shared risk member contributions paid into the fund on account

28

of current service or previous State service or creditable

29

nonstate service, together with the statutory interest credited

30

on the contributions until the date of termination of service.

- 57 -

 


1

In the case of a vestee, statutory interest shall be credited

2

until the effective date of retirement. A member's account shall

3

not be credited with statutory interest for more than two years

4

during a leave without pay.

5

"Shared risk member contributions."  The product of the

6

shared risk contribution rate and the compensation of a member

7

for service credited as Class A-3 or Class A-4.

8

* * *

9

"Superannuation age."  [Any] For classes of service other

10

than Class A-3 and Class A-4, any age upon accrual of 35

11

eligibility points or age 60, except for a member of the General

12

Assembly, an enforcement officer, a correction officer, a

13

psychiatric security aide, a Delaware River Port Authority

14

policeman or an officer of the Pennsylvania State Police, age

15

50, and, except for a member with Class G, Class H, Class I,

16

Class J, Class K, Class L, Class M or Class N service, age 55

17

upon accrual of 20 eligibility points. For Class A-3 and Class

18

A-4 service, any age upon accrual of 35 eligibility points 

<--

19

attainment of a superannuation score of 92, provided the member

<--

20

has accrued 35 eligibility points, or age 65, or for park

<--

21

rangers or capitol police officers, age 55 with 20 years of

22

service as a park ranger or capitol police officer, except for a

23

member of the General Assembly, an enforcement officer, a

24

correction officer, a psychiatric security aide, a Delaware

25

River Port Authority policeman or an officer of the Pennsylvania

26

State Police, age 55. A vestee with Class A-3 or Class A-4

<--

27

service credit attains superannuation age on the birthday the

28

vestee attains the age resulting in a superannuation score of

29

92, provided the vestee has at least 35 eligibility points, or

30

attains another applicable superannuation age, whichever occurs

- 58 -

 


1

first.

2

"Superannuation score."  The sum of the member's age in whole

3

years on his last birthday and the amount of the member's total

4

eligibility points on the member's effective date of retirement,

5

expressed in whole years and whole eligibility points and

6

disregarding fractions of a year and fractions of total

7

eligibility points.

8

* * *

9

"Total accumulated deductions."  The sum of the regular

10

accumulated deductions, additional accumulated deductions, the

11

social security integration accumulated deductions, shared risk

12

member contributions and all other contributions paid into the

13

fund for the purchase, transfer or conversion of credit for

14

service or other coverage together with all statutory interest

15

credited thereon until the date of termination of service. In

16

the case of a vestee or a special vestee, statutory interest

17

shall be credited until the effective date of retirement. A

18

member's account shall not be credited with statutory interest

19

for more than two years during a leave without pay.

20

* * *

21

"Vestee."  A member with five or more eligibility points[,

22

or] in a class of service other than Class A-3 or Class A-4 or

23

Class T-E or Class T-F in the Public School Employees'

24

Retirement System, a member with Class G, Class H, Class I,

25

Class J, Class K, Class L, Class M or Class N service with five

26

or more eligibility points, or a member with Class A-3 or Class

27

A-4 service with ten or more eligibility points who has

28

terminated State service and has elected to leave his total

29

accumulated deductions in the fund and to defer receipt of an

30

annuity.

- 59 -

 


1

Section 7.2.  Sections 5302(e) 5302(b) and (e), 5303(b)(1)

<--

2

and 5304(a) of Title 71 are amended to read:

3

§ 5302.  Credited State service.

4

* * *

5

(b)  Creditable leaves of absence.--

<--

6

(1)  A member on leave without pay who is studying under

7

a Federal grant approved by the head of his department or who

8

is engaged up to a maximum of two years of temporary service

9

with the United States Government, another state or a local

10

government under the Intergovernmental Personnel Act of 1970,

11

5 U.S.C. §§ 1304, 3371-3376; 42 U.S.C. §§ 4701-4772, shall be

12

eligible for credit for such service: Provided, That

13

contributions are made in accordance with sections 5501

14

(relating to regular member contributions for current

15

service), 5501.1 (relating to shared risk member

16

contributions), 5505.1 (relating to additional member

17

contributions) and 5507 (relating to contributions by the

18

Commonwealth and other employers), the member returns from

19

leave without pay to active State service for a period of at

20

least one year, and he is not entitled to retirement benefits

21

for such service under a retirement system administered by

22

any other governmental agency.

23

(2)  An active member on paid leave granted by an

24

employer for purposes of serving as an elected full-time

25

officer for a Statewide employee organization which is a

26

collective bargaining representative under the act of June 

27

24, 1968 (P.L.237, No.111), referred to as the Policemen and

28

Firemen Collective Bargaining Act, or the act of July 23, 

29

1970 (P.L.563, No.195), known as the Public Employe Relations

30

Act, and up to 14 full-time business agents appointed by an

- 60 -

 


1

employee organization that represents correction officers

2

employed at State correctional institutions: Provided, That

3

for elected full-time officers such leave shall not be for

4

more than three consecutive terms of the same office and for

5

up to 14 full-time business agents appointed by an employee

6

organization that represents correction officers employed at

7

State correctional institutions no more than three

8

consecutive terms of the same office; that the employer shall

9

fully compensate the member, including, but not limited to,

10

salary, wages, pension and retirement contributions and

11

benefits, other benefits and seniority, as if he were in

12

full-time active service; and that the Statewide employee

13

organization shall fully reimburse the employer for all

14

expenses and costs of such paid leave, including, but not

15

limited to, contributions and payment in accordance with

16

sections 5501, 5501.1, 5505.1 and 5507, if the employee

17

organization either directly pays, or reimburses the

18

Commonwealth or other employer for, contributions made in

19

accordance with section 5507.

20

* * *

21

(e)  Cancellation of credited service.--All credited service

22

shall be cancelled if a member withdraws his total accumulated

23

deductions except that a member with Class A-3 or Class A-4

24

service credit and one or more other classes of service credit

25

shall not have his service credit as a member of any classes of

<--

26

service other than as a member of Class A-3 or Class A-4

27

cancelled when the member receives a lump sum payment of

28

accumulated deductions resulting from Class A-3 or Class A-4

29

service pursuant to section 5705.1 (relating to payment of

30

accumulated deductions resulting from Class A-3 and Class A-4

- 61 -

 


1

service).

2

§ 5303.  Retention and reinstatement of service credits.

3

* * *

4

(b)  Eligibility points for prospective credited service.--

5

(1)  Every active member of the system or a multiple

6

service member who is a school employee and a member of the

7

Public School Employees' Retirement System on or after the

8

effective date of this part shall receive eligibility points

9

in accordance with section 5307 for current State service,

10

previous State service, or creditable nonstate service upon

11

compliance with sections 5501 (relating to regular member

12

contributions for current service), 5501.1 (relating to

<--

13

shared risk contributions), 5504 (relating to member

14

contributions for the purchase of credit for previous State

15

service or to become a full coverage member), 5505 (relating

16

to contributions for the purchase of credit for creditable

17

nonstate service), 5505.1 (relating to additional member

18

contributions) or 5506 (relating to incomplete payments).

19

Subject to the limitations in sections 5306.1 (relating to

20

election to become a Class AA member) and 5306.2 (relating to

21

elections by members of the General Assembly), the class or

22

classes of service in which the member may be credited for

23

previous State service prior to the effective date of this

24

part shall be the class or classes in which he was or could

25

have at any time elected to be credited for such service,

26

except that a State employee who first becomes a member of

27

the system on or after January 1, 2011, or on or after

28

December 1, 2010, as a member of the General Assembly and:

29

(i)  is credited with Class A-3 service for such

30

membership, shall be credited only with Class A-3 service

- 62 -

 


1

for previous State service performed before January 1,

2

2011, that was not previously credited in the system; or

3

(ii)  is credited with Class A-4 service for such

4

membership, shall be credited only with Class A-3 A-4 

<--

5

service for previous State service performed before

6

January 1, 2011, that was not previously credited in the

7

system. The class of service in which a member shall be

<--

8

credited for

9

The class of service in which a member shall be credited for 

<--

10

service subsequent to the effective date of this part shall

11

be determined in accordance with section 5306 (relating to

12

classes of service).

13

* * *

14

§ 5304.  Creditable nonstate service.

15

(a)  Eligibility.--

16

(1)  An active member who first becomes an active member

17

before January 1, 2011, or before December 1, 2010, as a

18

member of the General Assembly, or a multiple service member

19

who first becomes an active member before January 1, 2011, or

20

before December 1, 2010, as a member of the General Assembly,

21

and who is a school employee and an active member of the

22

Public School Employees' Retirement System shall be eligible

23

for Class A service credit for creditable nonstate service as

24

set forth in subsections (b) and (c) except that intervening

25

military service shall be credited in the class of service

26

for which the member was eligible at the time of entering

27

into military service and for which he makes the required

28

contributions and except that a multiple service member who

29

is a school employee and an active member of the Public

30

School Employees' Retirement System shall not be eligible to

- 63 -

 


1

purchase service credit for creditable nonstate service set

2

forth in subsection (c)(5).

3

(2)  An active member who first becomes an active member

4

on or after January 1, 2011, or on or after December 1, 2010,

5

as a member of the General Assembly, or a multiple service

6

member who first becomes an active member on or after January

7

1, 2011, or on or after December 1, 2010, as a member of the

8

General Assembly, and who is a school employee and an active

9

member of the Public School Employees' Retirement System

10

shall be eligible for Class A-3 service credit for creditable

11

nonstate service as set forth in subsections (b) and (c)

12

except that intervening military service shall be credited in

13

the class of service for which the member was eligible at the

14

time of entering into military service and for which he makes

15

the required contributions and except that a multiple service

16

member who is a school employee and an active member of the

17

Public School Employees' Retirement System shall not be

18

eligible to purchase service credit for creditable nonstate

19

service set forth in subsection (c)(5).

20

* * *

21

Section 7.3.  Section 5306(a), (a.1)(1), (2), (5) and (6) and

22

(a.2) of Title 71 are amended and the section is amended by

23

adding a subsection to read:

24

§ 5306.  Classes of service.

25

(a)  Class A and Class A-3 membership.--

26

(1)  A State employee who is a member of Class A on the

27

effective date of this part or who first becomes a member of

28

the system subsequent to the effective date of this part and

29

before January 1, 2011, or before December 1, 2010, as a

30

member of the General Assembly, shall be classified as a

- 64 -

 


1

Class A member and receive credit for Class A service upon

2

payment of regular and additional member contributions for

3

Class A service, provided that the State employee does not

4

become a member of Class AA pursuant to subsection (a.1) or a

5

member of Class D-4 pursuant to subsection (a.2).

6

(2)  A State employee who first becomes a member of the

7

system on or after January 1, 2011, or on or after December

8

1, 2010, as a member of the General Assembly, shall be

9

classified as a Class A-3 member and receive credit for Class

10

A-3 service upon payment of regular member contributions and

<--

11

shared risk member contributions for Class A-3 service

12

provided that the State employee does not become a member of

13

Class A-4 pursuant to subsection (a.3), except that a member

14

of the judiciary shall be classified as a member of such

15

other class of service for which the member of the judiciary

16

is eligible, shall elect, and make regular member

17

contributions.

18

(a.1)  Class AA membership.--

19

(1)  A person who becomes a State employee and an active

20

member of the system after June 30, 2001, and who first

21

became an active member before January 1, 2011, or before

22

December 1, 2010, as a member of the General Assembly, and

23

who is not a State police officer and not employed in a

24

position for which a class of service other than Class A is

25

credited or could be elected shall be classified as a Class

26

AA member and receive credit for Class AA State service upon

27

payment of regular member contributions for Class AA service

28

and, subject to the limitations contained in paragraph (7),

29

if previously a member of Class A or previously employed in a

30

position for which Class A service could have been earned,

- 65 -

 


1

shall have all Class A State service (other than State

2

service performed as a State police officer or for which a

3

class of service other than Class A was earned or could have

4

been elected) classified as Class AA service.

5

(2)  A person who is a State employee on June 30, 2001,

6

and July 1, 2001, but is not an active member of the system

7

because membership in the system is optional or prohibited

8

pursuant to section 5301 (relating to mandatory and optional

9

membership) and who first becomes an active member after June

10

30, 2001, and before January 1, 2011, or before December 1,

11

2010, as a member of the General Assembly, and who is not a

12

State police officer and not employed in a position for which

13

a class of service other than Class A is credited or could be

14

elected shall be classified as a Class AA member and receive

15

credit for Class AA State service upon payment of regular

16

member contributions for Class AA service and, subject to the

17

limitations contained in paragraph (7), if previously a

18

member of Class A or previously employed in a position for

19

which Class A service could have been earned, shall have all

20

Class A State service (other than State service performed as

21

a State Police officer or for which a class of service other

22

than Class A was earned or could have been elected)

23

classified as Class AA service.

24

* * *

25

(5)  A former State employee who first becomes a member

26

before January 1, 2011, or before December 1, 2010, as a

27

member of the General Assembly, other than a former State

28

employee who was a State police officer on or after July 1,

29

1989, who is a school employee and who on or after July 1,

30

2001, becomes a multiple service member, subject to the

- 66 -

 


1

limitations contained in paragraph (7), shall receive Class

2

AA service credit for all Class A State service other than

3

State service performed as a State employee in a position in

4

which the former State employee could have elected a class of

5

service other than Class A.

6

(6)  A State employee who after June 30, 2001, becomes a

7

State police officer or who is employed in a position in

8

which the member could elect membership in a class of service

9

other than Class AA or Class D-4 shall retain any Class AA

10

service credited prior to becoming a State police officer or

11

being so employed but shall be ineligible to receive Class AA

12

credit thereafter and instead shall receive Class A credit

13

for service as a member of the judiciary or if he first

14

became a member before January 1, 2011, or December 1, 2010,

15

as a member of the General Assembly, or Class A-3 credit for

16

service other than as a member of the judiciary and he first

17

became a member on or after January 1, 2011, or December 1,

18

2010, as a member of the General Assembly, unless a class of

19

membership other than Class A is elected.

20

* * *

21

(a.2)  Class of membership for members of the General

22

Assembly.--

23

(1)  A person who:

24

(i)  becomes a member of the General Assembly and an

25

active member of the system after June 30, 2001, and

26

before December 1, 2010; or

27

(ii)  is a member of the General Assembly on July 1,

28

2001, but is not an active member of the system because

29

membership in the system is optional pursuant to section

30

5301 and who becomes an active member after June 30,

- 67 -

 


1

2001, and before December 1, 2010;

2

and who was not a State police officer on or after July 1,

3

1989, shall be classified as a Class D-4 member and receive

4

credit as a Class D-4 member for all State service as a

5

member of the General Assembly upon payment of regular member

6

contributions for Class D-4 service and, subject to the

7

limitations contained in subsection (a.1)(7), if previously a

8

member of Class A or employed in a position for which Class A

9

service could have been earned, shall receive Class AA

10

service credit for all Class A State service, other than

11

State service performed as a State police officer or for

12

which a class of service other than Class A or Class D-4 was

13

or could have been elected or credited.

14

(2)  Provided an election to become a Class D-4 member is

15

made pursuant to section 5306.2 (relating to elections by

16

members of the General Assembly), a State employee who was

17

not a State police officer on or after July 1, 1989, who on

18

July 1, 2001, is a member of the General Assembly and an

19

active member of the system and not a member of Class D-3

20

shall be classified as a Class D-4 member and receive credit

21

as a Class D-4 member for all State service performed as a

22

member of the General Assembly not credited as another class

23

other than Class A upon payment of regular member

24

contributions for Class D-4 service and, subject to the

25

limitations contained in paragraph (a.1)(7), shall receive

26

Class AA service credit for all Class A State service, other

27

than State service performed as a State police officer or as

28

a State employee in a position in which the member could have

29

elected a class of service other than Class A, performed

30

before July 1, 2001.

- 68 -

 


1

(3)  A member of the General Assembly who after June 30,

2

2001, becomes a State police officer shall retain any Class

3

AA service or Class D-4 service credited prior to becoming a

4

State police officer or being so employed but shall be

5

ineligible to receive Class AA or Class D-4 credit thereafter

6

and instead shall receive Class A credit or Class A-3 credit

7

if he first becomes a member of the system on or after

8

January 1, 2011.

9

(4)  Notwithstanding the provisions of this subsection,

10

no service as a member of the General Assembly performed

11

before December 1, 2010, that is not credited as Class D-4

12

service on November 30, 2010, shall be credited as Class D-4

13

service, unless such service was previously credited in the

14

system as Class D-4 service and the member withdrew his total

15

accumulated deductions as provided in section 5311 (relating

16

to eligibility for refunds) or 5701 (relating to return of

17

total accumulated deductions). No service as a member of the

18

General Assembly performed on or after December 1, 2010,

19

shall be credited as Class D-4 service unless the member

20

previously was credited with Class D-4 service credits.

21

(a.3)  Class A-4 membership.--Provided that an election to

22

become a Class A-4 member is made pursuant to section 5306.3

23

(relating to election to become a Class A-4 member), a State

24

employee who otherwise would be a member of Class A-3 shall be

25

classified as a Class A-4 member and receive Class A-4 credit

<--

26

for all creditable State service performed after the effective

27

date of membership in the system, except as a member of the

28

judiciary, upon payment of regular member contributions and

<--

29

shared risk member contributions for Class A-4 service.

30

* * *

- 69 -

 


1

Section 7.4.  Title 71 is amended by adding a section to

2

read:

3

§ 5306.3.  Election to become a class Class A-4 member.

<--

4

(a)  General rule.--A person who otherwise is eligible for

5

Class A-3 membership who has not previously elected or declined

6

to elect Class A-4 membership may elect to become a member of

7

Class A-4.

8

(b)  Time for making election.--The election to become a

9

Class A-4 member must be made by the member filing written

10

notice with the board in a form and manner determined by the

11

board no later than 45 days after notice from the board of the

12

member's eligibility to elect Class A-4 membership.

13

(c)  Effect of election.--An election to become a Class A-4

14

member shall be irrevocable and shall become effective on the

15

effective date of membership in the system and shall remain in

16

effect for all future creditable State service, other than

17

service performed as a member of the judiciary. Payment of

18

regular member contributions for Class A-4 State service

19

performed prior to the election of Class A-4 service membership 

<--

20

shall be made in a form, manner and time determined by the

21

board. Upon termination and subsequent reemployment, a member

22

who elected Class A-4 membership shall be credited as a Class

23

A-4 member for creditable State service performed after

24

reemployment, except as a member of the judiciary, regardless of

25

termination of employment, termination of membership by

26

withdrawal of accumulated deductions or status as an annuitant,

27

vestee or inactive member after the termination of service.

28

(d)  Effect of failure to make election.--Failure to elect to

29

become a Class A-4 member within the election period set forth

30

in subsection (b) shall result in all of the member's State

- 70 -

 


1

service, other than service performed as a member of the

2

judiciary, being credited as Class A-3 service and not subject

3

to further election or crediting as Class A-4 service. Upon

4

termination and subsequent employment, a member who failed to

5

elect to become a Class A-4 member shall not be eligible to make

6

another election to become a Class A-4 member for either past or

7

future State service.

8

Section 7.5.  Sections 5308(b) and 5309 of Title 71 are

9

amended to read:

10

§ 5308.  Eligibility for annuities.

11

* * *

12

(b)  Withdrawal annuity.--

13

(1)  Any vestee or any active member or inactive member

14

on leave without pay who terminates State service having five

15

or more eligibility points and who does not have Class A-3 or

16

Class A-4 service credit or Class T-E or Class T-F service

17

credit in the Public School Employees' Retirement System, or

18

who has Class G, Class H, Class I, Class J, Class K, Class L,

19

Class M or Class N service and terminates State service

20

having five or more eligibility points, upon compliance with

21

section 5907(f), (g) or (h) shall be entitled to receive an

22

annuity.

23

(2)  Any vestee, active member or inactive member on

24

leave without pay who has Class A-3 or Class A-4 service

25

credit or Class T-E or Class T-F service credit in the Public

26

School Employees' Retirement System who terminates State

27

service having ten or more eligibility points, upon

28

compliance with section 5907(f), (g) or (h), shall be

29

entitled to receive an annuity.

30

(3)  Any vestee, active member or inactive member on

- 71 -

 


1

leave without pay who has either Class A-3 or Class A-4

2

service credit or Class T-E or Class T-F service credit in

3

the Public School Employees' Retirement System and also has

4

service credited in the system in one or more other classes

5

of service who has five or more, but fewer than ten,

6

eligibility points, upon compliance with section 5907(f), (g)

7

or (h) shall be eligible to receive an annuity calculated on

8

his service credited in classes of service other than Class

9

A-3 or Class A-4, provided that the member has five or more

10

eligibility points resulting from service in classes other

11

than Class A-3 or Class A-4 or Class T-E or Class T-F service

12

in the Public School Employees' Retirement System.

13

* * *

14

§ 5309.  Eligibility for vesting.

15

Any member who:

16

(1)  Does not have Class A-3 or Class A-4 service credit

17

or Class T-E or Class T-F service credit in the Public School

18

Employees' Retirement System and terminates State service

19

with five or more eligibility points, or any member with

20

Class G, Class H, Class I, Class J, Class K, Class L, Class M

21

or Class N service with five or more eligibility points,

22

shall be eligible until attainment of superannuation age to

23

vest his retirement benefits.

24

(2)  Has Class A-3 or Class A-4 service credit or Class

25

T-E or Class T-F service credit in the Public School

26

Employees' Retirement System and terminates State service

27

with ten or more eligibility points shall be eligible until

28

attainment of superannuation age to vest his retirement

29

benefits.

30

(3)  Has either Class A-3 or Class A-4 service credit or

- 72 -

 


1

Class T-E or Class T-F service credit in the Public School

2

Employees' Retirement System, also has service credited in

3

the system in one or more other classes of service and has

4

five or more, but fewer than ten, eligibility points shall be

5

eligible until the attainment of superannuation age to vest

6

his retirement benefits calculated on his service credited in

7

classes of service other than Class A-3 or Class A-4 and to

8

be credited with statutory interest on total accumulated

9

deductions, regardless of whether or not any part of his

10

accumulated deductions are a result of Class A-3 or Class A-4

11

service credit.

12

Section 8.  Title 71 is amended by adding a section sections 

<--

13

to read:

14

§ 5501.1.  Shared risk member contributions for Class A-3 and

<--

15

Class A-4 service.

16

(a)  General.--Shared risk member contributions shall be made

17

to the fund on behalf of each member of Class A-3 or Class A-4

18

for current service credited as Class A-3 or Class A-4 as

19

provided under this section, except for any period of current

20

service in which the making of the contributions has ceased

21

solely by reason of any provision of this part relating to the

22

limitations under IRC § 401(a)(17) or 415. Shared risk member

23

contributions shall be credited to the members' savings account.

24

(b)  Determination of shared risk contribution rate.--

25

(1)  For the period from the effective date of this

26

section until June 30, 2014, the shared risk contribution

27

rate shall be zero.

28

(2)  For the period from July 1, 2014, to June 30, 2017,

29

if the annual interest rate adopted by the board for use

30

during the period from January 1, 2011, to December 31, 2013,

- 73 -

 


1

for the calculation of the normal contribution rate is more

2

than 1% greater than the actual rate of return, net of fees,

3

of the investments of the fund based on market value over the

4

period, the shared risk contribution rate shall be .5%. In

5

all other situations, the shared risk contribution rate shall

6

be zero.

7

(3)  For each subsequent three-year period, the shared

8

risk contribution rate shall be increased by .5% if the

9

annual interest rate adopted by the board for use during the

10

previous ten-year period for the calculation of the normal

11

contribution rate is more than 1% greater than the actual

12

rate of return, net of fees, of the investments of the fund

13

based on market value over the period. The shared risk

14

contribution rate shall be decreased by .5% if the annual

15

interest rate adopted by the board for use during the

16

previous ten-year period for the calculation of the normal

17

contribution rate is equal to or less than the actual rate of

18

return, net of fees, of the investments of the fund based on

19

market value over that period.

20

(4)  Notwithstanding paragraphs (2) and (3), the shared

21

risk contribution rate shall not be less than zero and shall

22

not be more than the experience adjustment factor resulting

23

from investment gains or losses in effect on the first day

24

when the new rate would be applied, expressed as a percentage

25

of member compensation and shall not be more than 2%. For the

26

determination of the shared risk contribution rate to be

27

effective July 1, 2017, the determination period shall be

28

January 1, 2011, through December 31, 2016. For the

29

determination of the shared risk contribution rate to be

30

effective July 1, 2020, the determination period shall be

- 74 -

 


1

January 1, 2011, through December 31, 2019.

2

(5)  The shared risk contribution rate and the factors

3

entering into its calculation shall be certified by the

4

actuary as part of the annual valuations and the actuarial

5

investigation and evaluation of the system conducted every

6

five years under section 5902(j) (relating to administrative

7

duties of the board).

8

(6)  In the event that the annual interest rate adopted

9

by the board for the calculation is changed during the period

10

used to determine the shared risk contribution rate, the

11

board with the advice of the actuary shall determine the

12

applicable rate during the entire period, expressed as an

13

annual rate.

14

(7)  For any fiscal year in which the actual

15

contributions by the Commonwealth or an employer are lower

16

than those required to be made under section 5507(d)

17

(relating to contributions by the Commonwealth and other

18

employers), the prospective shared risk contribution rate for

19

those employees whose employers are not making the

20

contributions required by section 5507(d) shall be zero and

21

shall not subsequently be increased except as otherwise

22

provided in this section.

23

(8)  If the actuary certifies that the accrued liability

24

contributions calculated in accordance with the actuarial

25

cost method provided in section 5508(b) (relating to

26

actuarial cost method), as adjusted by the experience

27

adjustment factor, are zero or less, then the shared risk

28

contribution rate for the next fiscal year shall be zero and

29

shall not subsequently be increased except as otherwise

30

provided in this section.

- 75 -

 


1

§ 5501.1 5501.2.  Definitions.

<--

2

The following words and phrases when used in this chapter

3

shall have the meanings given to them in this section unless the

4

context clearly indicates otherwise:

5

"Actuarially required contribution rate."  The employer

6

contribution rate as calculated pursuant to section 5508(a),

7

(b), (c), (e) and (f) (relating to actuarial cost method).

8

"Costs added by legislation."  The sum, if positive, of all

9

changes in the actuarially required contribution rate resulting

10

from legislation enacted in the year since the last actuarial

11

valuation and not included in the determination of the prior

12

year's final contribution rate, computed as the rate of total

13

compensation of all active members certified by the actuary as

14

sufficient to make the employer normal contributions and

15

sufficient to amortize legislatively created changes in the

16

unfunded actuarial liability as a level percentage of

<--

17

compensation in equal dollar annual installments over a period

<--

18

of ten years from the July 1 following the valuation date.

19

Section 9.  Sections 5502.1, 5504(a), 5505(b) and (d), 5507,

<--

20

5508, 5702(a)(4) and (6), 5704(e) and 5705(a) of Title 71 are

21

amended to read:

22

Section 9.  Sections 5502.1, 5503.1(a), 5504(a), 5505, 5507,

<--

23

5508, 5702(a)(4) and (6), 5704(e) and 5705(a) of Title 71 are

24

amended to read:

25

§ 5502.1.  Waiver of regular member contributions and Social

26

Security integration member contributions.

27

(a)  General rule.--Notwithstanding the provisions of

28

sections 5501 (relating to regular member contributions for

29

current service) and 5502 (relating to Social Security

30

integration member contributions), no regular member

- 76 -

 


1

contributions or Social Security integration member

2

contributions shall be made by an active member for the period

3

from July 1 to the following June 30 if the maximum single life

4

annuity to which the member would have been entitled to receive

5

had the member retired with an effective date of retirement on

6

the preceding January 1 is greater than 110% of the highest

7

calendar year compensation of the member, provided the member

8

files a written election as prescribed by the board.

9

(b)  Applicability.--This section shall not apply to any

10

member who has Class A-3 or Class A-4 service credit.

11

§ 5503.1.  Pickup contributions.

<--

12

(a)  Treatment for purposes of IRC § 414(h).--All

13

contributions required to be made under sections 5501 (relating

14

to regular member contributions for current service), 5501.1

15

(relating to shared risk member contributions), 5502 (relating

16

to Social Security integration member contributions), 5503

17

(relating to joint coverage member contributions) and section

18

5505.1 (relating to additional member contributions), with

19

respect to current State service rendered by an active member on

20

or after January 1, 1982, shall be picked up by the Commonwealth

21

or other employer and shall be treated as the employer's

22

contribution for purposes of IRC § 414(h).

23

* * *

24

§ 5504.  Member contributions for the purchase of credit for

25

previous State service or to become a full coverage

26

member.

27

(a)  Amount of contributions for service in other than Class

28

G through N.--

29

(1)  The contributions to be paid by an active member or

30

eligible school employee for credit for total previous State

- 77 -

 


1

service other than service in Class G, Class H, Class I,

2

Class J, Class K, Class L, Class M and Class N or to become a

3

full coverage member shall be sufficient to provide an amount

4

equal to the regular and additional accumulated deductions

5

which would have been standing to the credit of the member

6

for such service had regular and additional member

7

contributions been made with full coverage in the class of

8

service and at the rate of contribution applicable during

9

such period of previous service and had his regular and

10

additional accumulated deductions been credited with

11

statutory interest during all periods of subsequent State and

12

school service up to the date of purchase.

13

(2)  Notwithstanding paragraph (1), members with Class

14

A-3 State service shall make contributions and receive credit

15

as if the previous State service was Class A-3 service, and

16

members with Class A-4 State service shall make contributions

17

and receive credit as if the previous State service was Class

18

A-4 service, even if it would have been credited as a

19

different class of service had the State employee been a

20

member of the system at the time the service was performed

21

unless it was mandatory that the State employee be an active

22

member of the system and the previous State service is being

23

credited as the result of a mandatory active membership

24

requirement.

25

* * *

26

§ 5505.  Contributions for the purchase of credit for creditable

27

nonstate service.

28

* * *

<--

29

(a)  Source of contributions.--The total contributions to

<--

30

purchase credit for creditable nonstate service of an active

- 78 -

 


1

member or eligible school employee shall be paid either by the

2

member, the member's previous employer, or by some agreed upon

3

combination of the member, his previous employer, and, if

4

specifically provided, the Commonwealth.

5

(b)  Nonintervening military service.--

6

(1)  The amount due for the purchase of credit for

7

military service other than intervening military service by

<--

8

State employees who first become members of the system before

9

January 1, 2011, or before December 1, 2010, as a member of

10

the General Assembly shall be determined by applying the

11

product of the member's basic contribution rate and the class

<--

12

of service multiplier applicable to contributions for the

13

class of service to which the military service will be

14

credited, the additional contribution rate plus the

15

Commonwealth normal contribution rate for active members at

16

the time of entry, subsequent to such military service, of

17

the member into State service to his average annual rate of

18

compensation over the first three years of such subsequent

19

State service and multiplying the result by the number of

20

years and fractional part of a year of creditable

21

nonintervening military service being purchased together with

22

statutory interest during all periods of subsequent State and

23

school service to date of purchase. Upon application for

24

credit for such service, payment shall be made in a lump sum

25

within 30 days or in the case of an active member or eligible

26

school employee who is an active member of the Public School

27

Employees' Retirement System it may be amortized with

28

statutory interest through salary deductions in amounts

29

agreed upon by the member and the board. The salary deduction

30

amortization plans agreed to by members and the board may

- 79 -

 


1

include a deferral of payment amounts and statutory interest

2

until the termination of school service or State service as

3

the board in its sole discretion decides to allow. The board

4

may limit salary deduction amortization plans to such terms

5

as the board in its sole discretion determines. In the case

6

of an eligible school employee who is an active member of the

7

Public School Employees' Retirement System, the agreed upon

8

salary deductions shall be remitted to the Public School

9

Employees' Retirement Board, which shall certify and transfer

10

to the board the amounts paid. Application may be filed for

11

all such military service credit upon completion of three

12

years of subsequent State service and shall be credited as

<--

13

Class A-3 service for State employees who first become

14

members of the system on or after January 1, 2011, or on or

15

after December 1, 2010, as a member of the General Assembly,

16

and as Class A service for all other members.

<--

17

(2)  Applicants may purchase credit as follows:

18

(i)  one purchase of the total amount of creditable

19

nonintervening military service; or

20

(ii)  one purchase per 12-month period of a portion

21

of creditable nonintervening military service.

22

The amount of each purchase shall be not less than one year

23

of creditable nonintervening military service.

24

* * *

<--

25

(c)  Intervening military service.--Contributions on account

<--

26

of credit for intervening military service shall be determined

27

by the member's regular contribution rate, shared risk

28

contribution rate, Social Security integration contribution

29

rate, the additional contribution rate which shall be applied

30

only to those members who began service on or after the

- 80 -

 


1

effective date of this amendatory act and compensation at the

2

time of entry of the member into active military service,

3

together with statutory interest during all periods of

4

subsequent State and school service to date of purchase. Upon

5

application for such credit the amount due shall be certified in

6

the case of each member by the board in accordance with methods

7

approved by the actuary, and contributions may be made by:

8

(1)  regular monthly payments during active military

9

service; or

10

(2)  a lump sum payment within 30 days of certification;

11

or

12

(3)  salary deductions in amounts agreed upon by the

13

member or eligible school employee who is an active member of

14

the Public School Employees' Retirement System and the board.

15

The salary deduction amortization plans agreed to by members and

16

the board may include a deferral of payment amounts and

17

statutory interest until the termination of school service or

18

State service as the board in its sole discretion decides to

19

allow. The board may limit salary deduction amortization plans

20

to such terms as the board in its sole discretion determines. In

21

the case of an eligible school employee who is an active member

22

of the Public School Employees' Retirement System, the agreed

23

upon salary deductions shall be remitted to the Public School

24

Employees' Retirement Board, which shall certify and transfer to

25

the board the amounts paid.

26

(d)  Nonmilitary and nonmagisterial service.--Contributions

27

on account of credit for creditable nonstate service other than

28

military and magisterial service by State employees who first

<--

29

become members of the system before January 1, 2011, or before

30

December 1, 2010, as a member of the General Assembly shall be

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1

determined by applying the product of the member's basic

<--

2

contribution rate and the class of service multiplier applicable

<--

3

to contributions for the class of service to which such nonstate

4

service will be credited, the additional contribution rate plus

5

the Commonwealth normal contribution rate for active members at

6

the time of entry subsequent to such creditable nonstate service

7

of the member into State service to his compensation at the time

8

of entry into State service and multiplying the result by the

9

number of years and fractional part of a year of creditable

10

nonstate service being purchased together with statutory

11

interest during all periods of subsequent State and school

12

service to the date of purchase. Upon application for credit for

13

such service payment shall be made in a lump sum within 30 days

14

or in the case of an active member or eligible school employee

15

who is an active member of the Public School Employees'

16

Retirement System it may be amortized with statutory interest

17

through salary deductions in amounts agreed upon by the member

18

and the board. The salary deduction amortization plans agreed to

19

by members and the board may include a deferral of payment

20

amounts and statutory interest until the termination of school

21

service or State service as the board in its sole discretion

22

decides to allow. The board may limit salary deduction

23

amortization plans to such terms as the board in its sole

24

discretion determines. In the case of an eligible school

25

employee who is an active member of the Public School Employees'

26

Retirement System, the agreed upon salary deduction shall be

27

remitted to the Public School Employees' Retirement Board, which

28

shall certify and transfer to the board the amounts paid.

29

* * *

<--

30

(e)  Philadelphia magisterial service.--Contributions on

<--

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1

account of credit for service as a magistrate of the City of

2

Philadelphia shall be determined by the board to be equal to the

3

amount he would have paid as employee contributions together

4

with statutory interest to date of purchase had he been a State

5

employee during his period of service as a magistrate of the

6

City of Philadelphia. The amount so determined by the State

7

Employees' Retirement Board to be paid into the State Employees'

8

Retirement System shall be the obligation of the judge who

9

requested credit for previous service as a magistrate of the

10

City of Philadelphia; in no event shall such amount be an

11

obligation of the City of Philadelphia or the City of

12

Philadelphia retirement system.

13

(f)  Temporary Federal service.--Contributions on account of

14

credit for service as a temporary Federal employee assigned to

15

an air quality control complement for the Department of

16

Environmental Resources during the period of 1970 through 1975,

17

as authorized in section 5304(c)(5) (relating to creditable

18

nonstate service), shall be equal to the full actuarial cost of

19

the increased benefit obtained by virtue of the purchase. The

20

increased benefit attributable to the purchased service shall be

21

the difference between:

22

(1)  the annual amount of a standard single life annuity,

23

beginning at the earliest possible superannuation age,

24

calculated assuming no future salary increases, assuming

25

credit for the service to be purchased; and

26

(2)  the annual amount of a standard single life annuity,

27

calculated on the same basis, but excluding credit for the

28

service to be purchased.

29

The earliest possible superannuation age shall be the age at

30

which the member becomes first eligible for superannuation

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1

retirement assuming continued full-time service and credit for

2

the amount of service which the member has elected to purchase,

3

or the current attained age of the member, whichever is later.

4

The full actuarial cost of the increased benefit attributable to

5

the purchased service shall be the actuarial present value of a

6

deferred annuity equal to the amount of the increased benefit

7

determined above, beginning at the earliest possible

8

superannuation age and payable for life, calculated using a

9

preretirement interest assumption of 1.5%, a postretirement

10

interest assumption of 4%, no preretirement mortality assumption

11

and standard postretirement mortality assumptions. The purchase

12

payment shall be made in lump sum by the member within 30 days

13

of certification by the board of the required purchase amount or

14

may be amortized through salary deductions in amounts agreed

15

upon by the member and the board with interest payable on the

16

unpaid balance at the rate applicable to the most recently

17

issued 30-year bonds of the United States Treasury Department.

18

(g)  Justice of the peace service.--Contributions on account

19

of credit for service as a justice of the peace shall be

20

determined by the board to be equal to the amount he would have

21

paid as employee contributions together with statutory interest

22

to date of purchase had he been a State employee during his

23

period of service as a justice of the peace for the Commonwealth

24

plus the amount determined by applying the Commonwealth normal

25

contribution rate for active members at the beginning of the

26

district justice system as of January 1970 to the starting

27

salary of the district justice for the magisterial district in

28

which the member was elected dating from the beginning of the

29

district justice system as of January 1970 and multiplying the

30

result by the number of years and fractional part of a year of

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1

creditable service being purchased together with statutory

2

interest from entry into State service as a district justice to

3

the date of purchase. The amount so determined by board to be

4

paid into the system shall be the obligation of the justice who

5

requested credit for previous service as a justice of the peace

6

for the Commonwealth prior to 1970. A justice of the peace

7

desiring to purchase his or her service time prior to 1970 shall

8

have been elected or appointed a district justice any time

9

during or after 1970. The class of service credit a member shall

10

receive upon entry into the system shall be determined by the

11

time of his entry into the district justice system. It shall be

12

incumbent upon the district justice to certify to the board with

13

a copy of his commission or commissions the amount of time that

14

he served the Commonwealth as a justice of the peace. The salary

15

dollar amount that shall be used in the formula for determining

16

the member's contributions shall be equal to the starting salary

17

of the district justice for the magisterial district in which he

18

was elected, dating from the beginning of the district justice

19

system as of January 1970. In no event shall such an amount be

20

the obligation of the Commonwealth or the county in which the

21

justice served.

22

(h)  County service.--For purposes of this section, Class G,

23

Class H, Class I, Class J, Class K, Class L, Class M and Class N

24

service shall be disregarded in determining when a member enters

25

State service or the period of subsequent State service.

26

(i)  Purchases of nonstate service credit by State employees

27

who first became members of the system on or after December 1,

28

2010.--

29

(1)  Contributions on account of credit for creditable

30

nonstate service other than intervening military service and

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1

magisterial service by State employees who first become

2

members of the system on or after January 1, 2011, or on or

3

after December 1, 2010, as a member of the General Assembly

4

shall be equal to the full actuarial cost of the increased

5

benefit obtained by virtue of such service.

6

(2)  The full actuarial cost of the increased benefit

7

attributable to the purchased nonstate service credit shall

8

be the difference between:

9

(i)  the present value of a standard single life

10

annuity, beginning at the earliest possible

11

superannuation age assuming Class A-3 service credit for

12

the nonstate service to be purchased; and

13

(ii)  the present value of a standard single life

14

annuity, beginning at the earliest possible

15

superannuation age, excluding the nonstate service credit

16

to be purchased.

17

(3)  The full actuarial cost under paragraph (2) shall be

18

calculated using future salary increases, mortality tables,

19

interest rates and other actuarial assumptions as adopted by

20

the board with the advice of the actuary. The earliest

21

possible superannuation age shall be the current attained age

22

of the member if the member has attained superannuation age

23

for his current class of service or if the member has not

24

attained superannuation age, the age upon which the member

25

would attain superannuation age as a member in the current

26

class of service assuming continued full-time State service

27

through the attainment of superannuation age and credit for

28

the amount of service which the member has elected to

29

purchase.

30

(4)  The payment for credit purchased under this

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1

subsection shall be certified in each case by the board in

2

accordance with methods approved by the actuary and shall be

3

paid in a lump sum within 30 days or in the case of an active

4

member or eligible school employee who is an active member of

5

the Public School Employees' Retirement System may be

6

amortized with statutory interest through salary deductions

7

in amounts agreed upon by the member and the board. The

8

salary deduction amortization plans agreed to by members and

9

the board may include a deferral of payment amounts and

10

interest until the termination of school service or State

11

service as the board in its sole discretion decides to allow.

12

The board may limit the salary deduction amortization plans

13

to such terms as the board in its sole discretion determines.

14

In the case of an eligible school employee who is an active

15

member of the Public School Employees' Retirement System, the

16

agreed upon salary deductions shall be remitted to the Public

17

School Employees' Retirement Board, which shall certify and

18

transfer to the board the amounts paid.

19

§ 5507.  Contributions by the Commonwealth and other employers.

20

(a)  Contributions on behalf of active members.--The

21

Commonwealth and other employers whose employees are members of

22

the system shall make contributions to the fund on behalf of all

23

active members in such amounts as shall be certified by the

24

board as necessary to provide, together with the members' total

25

accumulated deductions, annuity reserves on account of

26

prospective annuities other than those provided in [section] 

<--

27

sections 5708 (relating to supplemental annuities), 5708.1

28

(relating to additional supplemental annuities), 5708.2

29

(relating to further additional supplemental annuities), 5708.3

30

(relating to supplemental annuities commencing 1994), 5708.4

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1

(relating to special supplemental postretirement adjustment),

2

5708.5 (relating to supplemental annuities commencing 1998),

3

5708.6 (relating to supplemental annuities commencing 2002),

4

5708.7 (relating to supplemental annuities commencing 2003) and

5

5708.8 (relating to special supplemental postretirement

6

adjustment of 2002), in accordance with the actuarial cost

7

method provided in section 5508(a), (b), (c), (d) and (f)

8

(relating to actuarial cost method).

9

(b)  Contributions on behalf of annuitants.--The Commonwealth

10

and other employers whose employees are members of the system 

11

shall make contributions on behalf of annuitants in such amounts

12

as shall be certified by the board as necessary to fund the

13

liabilities for supplemental annuities in accordance with the

14

actuarial cost method provided in section 5508(e) (relating to

15

actuarial cost method).

16

(c)  Contributions transferred by county retirement

17

systems.--

18

(1)  Each county retirement system or pension plan which

19

is notified by certification from the board that a former

20

contributor who was transferred to State employment pursuant

21

to 42 Pa.C.S. § 1905 (relating to county-level court

22

administrators) has elected to convert county service to

23

State service in accordance with section 5303.1 (relating to

24

election to convert county service to State service) shall

25

transfer to the board an amount equal to the actuarial

26

liability for the additional benefits that result in the

27

system as a result of the conversion as certified by the

28

board. This amount shall be calculated in such a manner and

29

using such actuarial factors and assumptions as the board,

30

after obtaining the advice of its actuary, shall determine

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1

and shall be calculated by determining the present value of

2

the future benefits for the former county contributors and

3

subtracting from that present value the present value of

4

future employee contributions and future employer normal cost

5

contributions.

6

(2)  The transfer shall occur no later than 180 days

7

after the certification by the board of the actuarial

8

liability for the additional benefits or 30 days following

9

the date of termination of service if the member terminates

10

State service after making the election to convert service,

11

whichever occurs first.

12

(3)  If any county retirement system or pension plan

13

fails to transfer, within the required time, the money

14

certified by the board under this subsection, then the

15

service of such members for the period of converted service

16

shall be credited, and the board shall notify the county

17

which employed the employee who is converting the county

18

service and the State Treasurer of the amount due. The State

19

Treasurer shall withhold out of any grants, subsidies or

20

other payments from the State General Fund appropriation or

21

appropriations next due such county an amount equal to the

22

amount which the county retirement system or pension plan

23

failed to pay and shall pay the amount so withheld to the

24

board for the payment of the amount due from that county's

25

retirement system or pension plan for the converted service.

26

(d)  Payment of final contribution rate.--Notwithstanding the

27

calculation of the actuarially required contribution rate and

28

the provisions of subsections (a) and (b), the Commonwealth and

29

other employers whose employees are members of the system shall

30

make contributions to the fund on behalf of all active members

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1

and annuitants in such amounts as shall be certified by the

2

board in accordance with section 5508(i).

3

(e)  Benefits completion plan contributions.--In addition to

4

all other contributions required under this section and section

5

5508, the Commonwealth and other employers whose employees are

<--

6

members of the system shall make contributions as certified by

7

the board pursuant to section 5941 (relating to benefits

8

completion plan).

9

§ 5508.  Actuarial cost method.

10

(a)  Employer contribution rate on behalf of active

11

members.--The amount of the Commonwealth and other employer

12

contributions on behalf of all active members shall be computed

13

by the actuary as a percentage of the total compensation of all

14

active members during the period for which the amount is

15

determined and shall be so certified by the board. The [total

16

employer] actuarially required contribution rate on behalf of

17

all active members shall consist of the employer normal

18

contribution rate, as defined in subsection (b), and the accrued

19

liability contribution rate as defined in subsection (c). The

20

[total employer] actuarially required contribution rate on

21

behalf of all active members shall be modified by the experience

22

adjustment factor as calculated in subsection (f) [but in no

23

case shall it be less than zero. The total employer contribution

24

rate shall be modified by the experience adjustment factor as

25

calculated in subsection (f), but in no case shall it be less

26

than:

27

(1)  2% for the fiscal year beginning July 1, 2004;

28

(2)  3% for the fiscal year beginning July 1, 2005; and

29

(3)  4% for the fiscal year beginning July 1, 2006, and

30

thereafter].

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1

(b)  Employer normal contribution rate.--The employer normal

2

contribution rate shall be determined after each actuarial

3

valuation on the basis of an annual interest rate and such

4

mortality and other tables as shall be adopted by the board in

5

accordance with generally accepted actuarial principles. The

6

employer normal contribution rate shall be determined as a level

7

percentage of the compensation of the average new active member,

8

which percentage, if contributed on the basis of his prospective

9

compensation through his entire period of active State service,

10

would be sufficient to fund the liability for any prospective

11

benefit payable to him[, except for the supplemental benefits

12

provided for in sections 5708 (relating to supplemental

13

annuities), 5708.1 (relating to additional supplemental

14

annuities), 5708.2 (relating to further additional supplemental

15

annuities), 5708.3 (relating to supplemental annuities

16

commencing 1994), 5708.4 (relating to special supplemental

17

postretirement adjustment), 5708.5 (relating to supplemental

18

annuities commencing 1998), 5708.6 (relating to supplemental

19

annuities commencing 2002), 5708.7 (relating to supplemental

20

annuities commencing 2003) and 5708.8 (relating to special

21

supplemental postretirement adjustment of 2002),] in excess of

22

that portion funded by his prospective member contributions, 

<--

23

excluding shared risk member contributions.

24

(c)  Accrued liability contribution rate.--

25

(1)  For the fiscal [year] years beginning Ju