SENATE AMENDED

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

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

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

Pennsylvania Consolidated Statutes, in Title 24, further

providing for definitions, for mandatory and optional

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membership, for contributions by the Commonwealth, for

payments by employers, for actuarial cost method, for

additional supplemental annuities, for further additional

supplemental annuities, for supplemental annuities commencing

1994, for supplemental annuities commencing 1998, for

supplemental annuities commencing 2002, for supplemental

annuities commencing 2003, for administrative duties of

board, for payments to school entities by Commonwealth, for

eligibility points for retention and reinstatement of service

credits and for creditable nonschool service; providing for

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

classes of service, for eligibility for annuities, for

eligibility for vesting, for regular member contributions,

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for member contributions for creditable school service, for

contributions for purchase of credit for creditable nonschool

service, for maximum single life annuity, for disability

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

regarding applications and elections of members and for

rights and duties of school employees and members; providing

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for Independent Fiscal Office study; in Title 71, 

establishing an independent fiscal office and making a

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related repeal; further providing for definitions; further

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providing, for credited State service, for retention and

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reinstatement of service credits, for creditable NONSTATE 

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nonstate service and for classes of service; providing for

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

eligibility for annuities, and for eligibility for vesting,; 

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providing for shared risk member contributions for Class A-3

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

regular member contributions and Social Security integration

member contributions, for member contributions for purchase

of credit for previous State service or to become a full

coverage member, for contributions for the purchase of credit

for creditable nonstate service, for contributions by the

Commonwealth and other employers, for actuarial cost method, 

for maximum single life annuity, for disability annuities and

for member's options; providing for payment of accumulated

deductions resulting from Class A-3 service; further

providing for additional supplemental annuities, for further

additional supplemental annuities, for supplemental annuities

commencing 1994, for supplemental annuities commencing 1998,

for supplemental annuities commencing 2002, for supplemental

annuities commencing 2003, for special supplemental

postretirement adjustment of 2002, for administrative duties

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

heads of departments and members, for duties of board

regarding applications and elections of members, for

installment payments of accumulated deductions, for rights

and duties of State employees and members, for members'

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savings account, for State accumulation account, for State

Police Benefit Account, for Enforcement Officers' Benefit

Account, for supplemental annuity account and for

construction of part; and providing for recertification to

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the Secretary of the Budget, Independent Fiscal Office study,

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for retirement eligibility of Pennsylvania State Police

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officers or members, for a prohibition on the issuance of

pension obligation bonds, for holding certain public

officials harmless, for construction of calculation or

actuarial method, for applicability and for certain

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operational provisions.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

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

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

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

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

section 8102 of Title 24 of the Pennsylvania Consolidated

Statutes are amended and the section is amended by adding

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definitions to read:

§ 8102.  Definitions.

The following words and phrases when used in this part shall

have, unless the context clearly indicates otherwise, the

meanings given to them in this section:

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

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

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

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

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

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

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"Class of service multiplier."

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"Employer."  Any governmental entity directly responsible for

the employment and payment of the school employee and charged

with the responsibility of providing public education within

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

colleges and universities, the Pennsylvania State University,

community colleges, area vocational-technical schools,

intermediate units, the State Board of Education, Scotland

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

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

Pennsylvania School for the Deaf.

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

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actuarially equivalent on the effective date of retirement to

the sum of the accumulated deductions and the shared risk member

contributions and statutory interest credited on the deductions

and contributions standing to the member's credit in the

members' savings account.

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"Pickup contributions."  Regular or joint coverage member

contributions and shared risk member contributions which are

made by the employer for active members for current service on

and after January 1, 1983.

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"Shared risk contribution rate."  The additional contribution

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

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

regular member contributions for current service).

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

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

final average salary, multiplied by the total number of years

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

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

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

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

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

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

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

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

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

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

service of a member.

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"Superannuation or normal retirement age."

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

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contribution rate and the shared risk contribution rate.

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

has terminated school service, has left his accumulated

deductions in the fund and is deferring filing of an application

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

a member with ten or more eligibility points who has terminated

school service, has left his accumulated deductions in the fund

and is deferring filing of an application for receipt of an

annuity.

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

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amended to read:

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

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read:

§ 8301.  Mandatory and optional membership.

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

mandatory as of the effective date of employment for all school

employees except the following:

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

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

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

year or annuitant who returns to school service under the

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

annuities).

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

section is amended by adding a subsection to read:

§ 8303.  Eligibility points for retention and reinstatement of

service credits.

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

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

active member of the State Employees' Retirement System on or

after the effective date of this part may purchase credit and

receive eligibility points:

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

previous creditable school service or creditable nonschool

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service; or

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

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school service, provided the member elects to become a Class

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

to become a Class T-D member);

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

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

except, that any purchase for reinstatement of service credit

shall be for all service previously credited.

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

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

date of this subsection shall have three years from the

effective date of this subsection to file a written application

with the board to purchase any previous noncreditable school

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

members on the effective date of this subsection but who become

active members after the effective date of this subsection and

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

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

purchase any previous noncreditable school service.

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

§ 8304.  Creditable nonschool service.

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

member who is an active member of the State Employees'

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

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

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

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

pursuant to section 8305.1 (relating to election to become a

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

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

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

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

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

such service under a retirement system administered and wholly

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

private employer, or a retirement program approved by the

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

mandatory and optional membership), and further provided that

such service is certified by the previous employer and the

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

member, the employer, and the board.

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

subsections to read:

§ 8305.  Classes of service.

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

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

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

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

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

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

payment of regular member contributions and the shared risk

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contributions.

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

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

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

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

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

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

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

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

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

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

of regular member contributions and the shared risk

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contributions.

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

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

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

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

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

the State Employees' Retirement System, on or after the

effective date of this subsection and who is eligible to become

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

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

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

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

eligible for such election.

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

member shall be irrevocable and shall commence from the original

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

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

service, regardless of whether the member terminates service or

has a break in service.

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

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

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

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

regardless of whether the member terminates service or has a

break in service.

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,

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

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

amended to read:

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

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

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

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

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

§ 8307.  Eligibility for annuities.

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

with five or more eligibility points or an active or inactive

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

having five or more eligibility points shall, upon filing a

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

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

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

who terminates school service having ten or more eligibility

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

receive an early annuity.

* * *

§ 8308.  Eligibility for vesting.

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

service with five or more eligibility points shall be entitled

to vest his retirement benefits until attainment of

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

terminates school service with ten or more eligibility points

shall be entitled to vest his retirement benefits until

attainment of superannuation age.

§ 8321.  Regular member contributions for current service.

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

the fund on behalf of each active member for current service

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

such contributions has ceased solely by reason of any provision

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

or 415(b).

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

Commencing with the annual actuarial valuation performed under

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

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

thereafter, the board shall compare the actual investment rate

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

the board for the calculation of the normal contribution rate,

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

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

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

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

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

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

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

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

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

member contribution rate in effect when they are hired. The

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

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

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

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

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

date used for the comparison required under this subsection, as

determined in the current annual actuarial valuation, the shared

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

annual interest rate adopted by the board for the calculation of

the normal contribution rate is changed during the period used

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

the advice of the actuary, shall determine the applicable rate

during the entire period, expressed as an annual rate.

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

rate of return experience following the effective date of

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

than the effective date of this subsection.

(2)  For any fiscal year in which the employer

contribution rate is lower than the final contribution rate

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

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

members shall be prospectively reset to the basic

contribution rate.

(3)  There shall be no increase in the member

contribution rate if there has not been an equivalent

increase to the employer contribution rate over the previous

three-year period.

§ 8323.  Member contributions for creditable school service.

(a)  Previous school service, sabbatical leave and full

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

an eligible State employee for credit for reinstatement of all

previously credited school service, school service not

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

time daily attendance, or full-coverage membership shall be

sufficient to provide an amount equal to the accumulated

deductions which would have been standing to the credit of the

member for such service had regular member contributions been

made with full coverage at the rate of contribution necessary to

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

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

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

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

statutory interest during the period the contributions would

have been made and during all periods of subsequent school and

State service up to the date of purchase.

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(c)  Approved leave of absence other than sabbatical leave

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

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

absence, other than sabbatical leave and activated military

service leave, shall be sufficient to transfer his membership to

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

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

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

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

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

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

such additional credited service. Such amount shall be the sum

of the amount required in accordance with the provisions of

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

member's basic contribution rate and the normal contribution

rate as provided in section 8328 (relating to actuarial cost

method) during such period multiplied by the compensation which

was received or which would have been received during such

period and with statutory interest during all periods of

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

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

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

military service leave as if he had been in regular attendance

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

provide an amount equal to the accumulated deductions which

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

service had regular member contributions been made with full

coverage at the rate of contribution necessary to be credited as

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

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

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

such contributions been credited with statutory interest during

the period the contributions would have been made and during all

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

purchase. In the case of activated military service leave

beginning after the date of enactment of this subsection,

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

regular attendance in the duties for which he is employed.

* * *

§ 8324.  Contributions for purchase of credit for creditable

nonschool service and noncreditable school service.

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

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

for creditable nonschool service of an active member or an

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

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

thereof, as provided by law.

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

purchase of credit for military service other than intervening

military service shall be determined by applying the member's

basic contribution rate plus the normal contribution rate as

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

the time of entry of the member into school service subsequent

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

received during the first three years of such subsequent

credited school service and multiplying the product by the

number of years and fractional part of a year of creditable

nonintervening military service being purchased together with

statutory interest during all periods of subsequent school and

State service to date of purchase. Upon certification of the

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

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

who is an active member of the State Employees' Retirement

System it may be amortized with statutory interest through

salary deductions in amounts agreed upon by the member and the

board. The salary deduction amortization plans agreed to by

members and the board may include a deferral of payment amounts

and statutory interest until the termination of school service

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

allow. The board may limit salary deduction amortization plans

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

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

of the State Employees' Retirement System, the agreed upon

salary deductions shall be remitted to the State Employees'

Retirement Board, which shall certify and transfer to the board

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

service credit upon completion of three years of subsequent

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

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

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

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

member makes a purchase of credit for such military service,

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

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

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

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noncreditable school service.--

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

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Class T-F credit for creditable nonschool service other than

military service shall be determined by applying the member's

basic contribution rate plus the normal contribution rate as

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

into school service subsequent to such creditable nonschool

service to his total compensation received during the first

year of subsequent credited school service and multiplying

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

year of creditable nonschool service being purchased together

with statutory interest during all periods of subsequent

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

in the case of purchase of credit for creditable nonschool

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

creditable nonschool service) the member shall pay only the

employee's share unless otherwise provided by law. Upon

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

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

an eligible State employee who is an active member of the

State Employees' Retirement System it may be amortized with

statutory interest through salary deductions in amounts

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

amortization plans agreed to by the members and the board may

include a deferral of payment amounts and statutory interest

until the termination of school service or State service as

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

may limit salary deduction amortization plans to such terms

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

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

State Employees' Retirement System, the agreed upon salary

deductions shall be remitted to the State Employees'

Retirement Board, which shall certify and transfer to the

board the amounts paid.

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

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credit for creditable nonschool service other than military

service shall be the present value of the full actuarial cost

of the increase in the projected superannuation annuity

caused by the additional service credited on account of the

purchase. Upon certification of the amount due, payment may

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

active member or an eligible State employee who is an active

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

amortized with statutory interest through salary deductions

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

salary deduction amortization plans agreed to by the members

and the board may include a deferral of payment amounts and

statutory interest until the termination of school service or

State service as the board in its sole discretion decides to

allow. The board may limit salary deduction amortization

plans to the terms as the board in its sole discretion

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

an active member of the State Employees' Retirement System,

the agreed upon salary deductions shall be remitted to the

State Employees' Retirement Board, which shall certify and

transfer to the board the amounts paid.

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

credit for noncreditable school service other than military

service shall be the present value of the full actuarial cost

of the increase in the projected superannuation annuity

caused by the additional service credited on account of the

purchase. Upon certification of the amount due, payment may

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

active member or an eligible State employee who is an active

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

amortized with statutory interest through salary deductions

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

salary deduction amortization plans agreed to by the members

and the board may include a deferral of payment amounts and

statutory interest until the termination of school service or

State service as the board in its sole discretion decides to

allow. The board may limit salary deduction amortization

plans to the terms as the board in its sole discretion

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

an active member of the State Employees' Retirement System,

the agreed upon salary deductions shall be remitted to the

State Employees' Retirement Board, which shall certify and

transfer to the board the amounts paid.

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

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

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

value of the full actuarial cost of the increase in the

projected superannuation annuity caused by the additional

service credited on account of the purchase of creditable work

experience. The amount paid for the purchase of credit for

creditable work experience shall not be payable as a lump sum

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

Any individual eligible to receive an annuity, excluding an

annuity received under the Federal Social Security Act (42

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

military pension system, shall not be eligible to purchase this

service.

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

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

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

determined by applying the member's basic contribution rate plus

the normal contribution rate as provided in section 8328 at the

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

compensation received during the first year of subsequent school

service and multiplying the product by the number of years and

fractional part of a year of creditable service being purchased,

together with statutory interest during all periods of

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

amount paid for the purchase of credit for creditable maternity

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

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

§ 8326.  Contributions by the Commonwealth.

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

Commonwealth shall make contributions into the fund on behalf of

all active members, including members on activated military

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

certified by the board as necessary to provide, together with

the members' contributions, annuity reserves on account of

prospective annuities as provided in this part in accordance

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

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

in a retirement program approved by the employer, the

Commonwealth shall contribute to such program on account of his

membership an amount no greater than the amount it would have

contributed had the employee been a member of the Public School

Employees' Retirement System.

* * *

§ 8327.  Payments by employers.

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

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

owned colleges and universities, Thaddeus Stevens [State School] 

College of Technology, [Pennsylvania State Oral] Western

Pennsylvania School for the Deaf, Scotland School for Veterans'

Children, and the Pennsylvania State University, shall make

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

the sum of the percentages, as determined under section 8328

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

compensation during the pay periods in the preceding quarter of

all its employees who were members of the system during such

period, including members on activated military service leave.

In the event a member on activated military service leave does

not return to service for the necessary time or receives an

undesirable, bad conduct or dishonorable discharge or does not

elect to receive credit for activated military service under

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

contributions made by the employer on behalf of such member

shall be returned with valuation interest upon application by

the employer.

* * *

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

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

of employees of the Department of Education, State-owned

colleges and universities, Thaddeus Stevens [State School]

College of Technology, [Pennsylvania State Oral] Western

Pennsylvania School for the Deaf, Scotland School for Veterans'

Children and The Pennsylvania State University, shall make

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

following manner:

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

shall be the sum of the percentages as determined under

section 8328 applied to the total compensation during the pay

periods in the preceding quarter of all employees who were

active members of the system during such period, including

members on activated military service leave. In the event a

member on activated military service leave does not return to

service for the necessary time or receives an undesirable,

bad conduct or dishonorable discharge or does not elect to

receive credit for activated military service under section

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

of such member shall be returned with valuation interest upon

application by the employer.

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

amount computed under subsection (a).

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

computing the amount of payment due each quarter, there shall

be excluded from the total compensation referred to in this

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

noneligible member on the basis of which member contributions

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

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

the employer on behalf of a noneligible member on the basis

of compensation which was subject to exclusion from total

compensation in accordance with the provisions of this

paragraph shall, upon the board's determination or upon

application by the employer, be returned to the employer with

valuation interest.

§ 8328.  Actuarial cost method.

(a)  Employer contribution rate [on behalf of active

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

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

as a percentage of the total compensation of all active members

during the period for which the amount is determined and shall

be so certified by the board. The total employer contribution

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

in subsection (h) plus the premium assistance contribution rate

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

contribution rate [on behalf of all active members] shall

consist of the normal contribution rate as defined in subsection

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

subsection (c) and the supplemental annuity contribution rate as

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

actuarially required contribution rate shall be modified by the

experience adjustment factors as calculated in subsection (e)

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

assistance contribution rate].

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

shall be determined after each actuarial valuation. [Until all

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accrued liability contributions have been completed, the] The 

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normal contribution rate shall be determined, on the basis of

the actuarial cost method, an annual interest rate and such

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

accordance with generally accepted actuarial principles, as a

level percentage of the compensation of the average new active

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

prospective compensation through the entire period of active

school service, would be sufficient to fund the liability for

any prospective benefit payable to him, in excess of that

portion funded by his prospective member contributions[, except

for the supplemental benefits provided in sections 8348

(relating to supplemental annuities), 8348.1 (relating to

additional supplemental annuities), 8348.2 (relating to further

additional supplemental annuities), 8348.3 (relating to

supplemental annuities commencing 1994), 8348.4 (relating to

special supplemental postretirement adjustment), 8348.5

(relating to supplemental annuities commencing 1998), 8348.6

(relating to supplemental annuities commencing 2002) and 8348.7

(relating to supplemental annuities commencing 2003)], excluding

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the shared risk contributions.

(c)  Accrued liability contribution rate.--

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

and ending June 30, 2011, the accrued liability contribution

rate shall be computed as the rate of total compensation of

all active members which shall be certified by the actuary as

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

2002, the present value of the liabilities for all

prospective benefits of active members, except for the

supplemental benefits provided in sections 8348 (relating to

supplemental annuities), 8348.1 (relating to additional

supplemental annuities), 8348.2 (relating to further

additional supplemental annuities), 8348.3 (relating to

supplemental annuities commencing 1994), 8348.4 (relating to

special supplemental postretirement adjustment), 8348.5

(relating to supplemental annuities commencing 1998), 8348.6

(relating to supplemental annuities commencing 2002) and

8348.7 (relating to supplemental annuities commencing 2003),

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

recognizing the actuarially expected investment return

immediately and recognizing the difference between the actual

investment return and the actuarially expected investment

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

annuity reserve account, and of the present value of normal

contributions and of member contributions payable with

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

remainder of their active service.

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

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

accrued liability contribution shall be equal to the amount

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

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

legislation enacted subsequent to June 30, 2002, but before

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

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

with or next following the effective date of the increase.

The amount of each annual accrued liability contribution for

such additional legislative liabilities shall be equal to the

amount of such contribution for the first annual payment.

(3)  Notwithstanding any other provision of law,

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

outstanding balance of the increase in accrued liability due

to the change in benefits enacted in 2001 and the outstanding

balance of the net actuarial loss incurred in fiscal year

2000-2001 shall be amortized in equal dollar annual

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

2002, and the outstanding balance of the net actuarial loss

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

dollar annual contributions over a period that ends 30 years

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

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

legislation enacted subsequent to June 30, 2003, such

additional liability shall be funded in equal dollar annual

contributions over a period of ten years from the first day

of July coincident with or next following the effective date

of the increase.

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

accrued liability contribution rate shall be computed as the

rate of total compensation of all active members which shall

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

percentage of compensation over a period of 30 24 years from

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

prospective benefits calculated as of June 30, 2010,

including the supplemental benefits as provided in sections

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

8348.7, in excess of the actuarially calculated assets in the

fund (calculated recognizing all realized and unrealized

investment gains and losses each year in level annual

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

accrued liability is increased by legislation enacted

subsequent to June 30, 2010, such additional liability shall

be funded as a level percentage of compensation over a period

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

legislation is enacted.

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

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

contributions from the Commonwealth and other employers

required to provide for the payment of the supplemental

annuities provided for in sections 8348, 8348.1, 8348.2,

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

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

commencing 2002 provided for in section 8348.6 shall be as

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

supplemental annuities commencing 2003 provided for in

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

amount of each annual supplemental annuities contribution

shall be equal to the amount of such contribution for the

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

supplemental annuities are increased by legislation enacted

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

increased benefits to be amortized shall be funded in equal

dollar annual installments over a period of ten years.]

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

contributions from the Commonwealth and other employers whose

employees are members of the system required to provide for

the payment of supplemental annuities as provided in sections

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

8348.7 shall be paid as part of the accrued liability

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

there shall not be a separate supplemental annuity

contribution rate attributable to those supplemental

annuities. In the event that supplemental annuities are

increased by legislation enacted subsequent to June 30, 2010,

the additional liability for the increase in benefits shall

be funded as a level percentage of compensation over a period

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

legislation is enacted.

(e)  Experience adjustment factor.--

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

liability contribution rate for the fiscal year beginning

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

accrued liability, excluding the gains or losses on the

assets of the health insurance account, due to actual

experience differing from assumed experience, changes in

actuarial assumptions, changes in contributions caused by the

final contribution rate being different from the actuarially

required contribution rate, active members making shared risk

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contributions or changes in the terms and conditions of the

benefits provided by the system by judicial, administrative

or other processes other than legislation, including, but not

limited to, reinterpretation of the provisions of this part,

shall be amortized [in equal dollar annual contributions] as

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

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24 years beginning with the July 1 second succeeding the

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actuarial valuation determining said increases or decreases.

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

for each year after the establishment of the accrued

liability contribution rate for the fiscal year beginning

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

accrued liability, excluding the gains or losses on the

assets of the health insurance account, due to actual

experience differing from assumed experience, changes in

actuarial assumptions, changes in the terms and conditions of

the benefits provided by the system by judicial,

administrative or other processes other than legislation,

including, but not limited to, reinterpretation of the

provisions of this part, shall be amortized in equal dollar

annual contributions over a period of 30 years beginning with

the July 1 second succeeding the actuarial valuation

determining said increases and decreases] (Reserved).

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

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

calculated according to this section shall be increased annually

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

the premium assistance program in accordance with section 8509

(relating to health insurance premium assistance program),

notwithstanding any other provisions of this section.

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

(1)  The collared contribution rate for each year shall

be determined by comparing the actuarially required

contribution rate, calculated without regard for the costs

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

rate.

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

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

actuarially required contribution rate, calculated without

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

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

active members greater than the prior year's final

contribution rate, then the collared contribution rate shall

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

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

respectively, of total compensation of all active members.

Otherwise, and for all other fiscal years, the collared

contribution rate shall not be applicable. In no case shall

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

compensation of all active members.

(h)  Final contribution rate.--

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

final contribution rate shall be is 5% of the total

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compensation of all active members. For each subsequent

fiscal year for which the collared contribution rate is

applicable, the final contribution rate shall be the collared

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

costs added by legislation.

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

rate shall be the actuarially required contribution rate,

provided that the final contribution rate shall not be less

than the normal contribution rate as provided in subsection

(b).

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

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

subsection unless the context clearly indicates otherwise:

"Actuarially required contribution rate."  The sum of the

following:

(1)  the normal contribution rate as calculated in

subsection (b);

(2)  the accrued liability contribution rate as

calculated in subsection (c);

(3)  the supplemental annuity contribution rate as

calculated in subsection (d);

(4)  the experience adjustment factor as calculated in

subsection (e); and

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

last actuarial valuation.

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

changes in the actuarially required contribution rate resulting

from legislation enacted in the year since the last actuarial

valuation and not included in the determination of the prior

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

compensation of all active members certified by the actuary as

sufficient to make the employer normal contributions and

sufficient to amortize legislatively created changes in the

unfunded actuarial liability as a level percentage of

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

succeeding the date of enactment.

§ 8342.  Maximum single life annuity.

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

coverage member who is eligible to receive an annuity pursuant

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

eligibility for annuities) and has made an application in

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

rights and duties of school employees and members) shall be

entitled to receive a maximum single life annuity attributable

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

single life annuities beginning at the effective date of

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

retirement is under superannuation age, multiplied by a

reduction factor calculated to provide benefits actuarially

equivalent to an annuity starting at superannuation age:

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

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

<--

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

annuities shall be reduced by a percentage determined by

multiplying the number of months, including a fraction of a

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

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

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

benefit, calculated as of the effective date of retirement,

greater than the member's final average salary:

(1)  A standard single life annuity multiplied by the

class of service multiplier and calculated on the basis of

the number of years of credited school service other than

concurrent service.

(2)  A standard single life annuity multiplied by the

class of service multiplier and calculated on the basis of

the number of years of concurrent service and multiplied by

the ratio of total compensation received in the school system

during the period of concurrent service to the total

compensation received during such period.

(3)  A supplemental annuity such that the total annuity

prior to any optional modification or any reduction due to

retirement prior to superannuation age shall be at least $100

for each full year of credited service.