Regular Session 2015-2016 Senate Bill 1071 P.N. 1410

PRINTER'S NO. 1410

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

1071

Session of

2015

INTRODUCED BY BROWNE, CORMAN, SCARNATI, GORDNER AND

EICHELBERGER, NOVEMBER 17, 2015

REFERRED TO FINANCE, NOVEMBER 17, 2015

AN ACT

Amending Titles 24 (Education), 51 (Military Affairs) and 71

(State Government) of the Pennsylvania Consolidated Statutes,

extensively revising pension provisions: for the Public

School Employees' Retirement System, in the areas of

preliminary provisions, of membership, contributions and

benefits, of School Employee's Defined Contribution Plan and

of administration and miscellaneous provisions; for health

insurance for retired school employees, in the area of

preliminary provisions; for military pensions, in the area of

military leave of absence; for boards and offices, in the

area of Independent Fiscal Office; for the State Employees'

Retirement System, in the areas of preliminary provisions, of

membership, credited service, classes of service and

eligibility for benefits, of State Employees' Defined

Contribution Plan, of contributions, of benefits and of

administration, funds, accounts, general provisions; and

providing, as to the revisions, for construction and

administration, for applicability, for funding, for

liability, for State Employee member statements and for State

Employees Retirement Board obligations.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

ARTICLE I

Section 101. The General Assembly finds and declares as

follows:

(1) It is the intent of the General Assembly to ensure

the financial health of the Commonwealth and its school

districts by adopting reforms to provide for the

sustainability of our public retirement system.

(2) Pennsylvania's retirement systems, SERS for State

employees and PSERS for school employees, together have an

unfunded liability of $60,121,184,000. The level of payment

by the Commonwealth and school districts required to annually

address these amounts is staggering, particularly when other

state revenues are reduced due to a struggling economy. The

current condition of Pennsylvania's unfunded system combined

with the State's structural deficit threaten the financial

well-being of current and future public employees.

(3) In order to fully fund State pensions systems,

economists estimate that contributions will continue to

require a significant portion of state revenues. In fiscal

year 2015-2016, pension expenditures are expected to exceed

$4,800,000,000 and $7,300,000,000 by 2025.

(4) The tax increases that would be required to address

increasing pension obligations would place a heavy burden on

the citizens of this Commonwealth and hamper the ability to

provide them with services vital to the public's health,

safety and welfare. Therefore, it is imperative that the

Commonwealth adopt reforms that will maintain the financial

health of the Commonwealth and its school districts.

(5) Therefore, the reforms contained in this legislation

are intended to use resources judiciously and enable the

Commonwealth to provide retirement security for Commonwealth

and school employees while reducing the burden on taxpayers.

(6) The reforms of the retirement benefits of

Commonwealth and school district employees contained in this

act are prospective and will not impact benefits earned from

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services rendered prior to the effective date of this act.

(7) The General Assembly finds that it is necessary to

advance and maintain the long-term stability of public

employee pension systems by adopting reform relating to

current and to future employees in order to:

(i) Ensure that the Commonwealth and its school

districts will have adequate funds to continue to be able

to provide retirement benefits for their employees.

(ii) To ensure that the cost of current and future

benefits does not jeopardize the ability and obligation

to provide for public education, infrastructure, programs

for the elderly and other vulnerable populations and

public safety.

(8) The General Assembly expressly finds and declares

that the situation confronting our pensions systems has

reached a critical state and that enactment of this act is

reasonable and necessary to achieve and protect the public

interests. Further, the General Assembly finds that

protecting benefits for services already rendered meets all

legal standards relating to changes in benefits.

ARTICLE II

Section 201. Section 8102 of Title 24 of the Pennsylvania

Consolidated Statutes is amended to read:

§ 8102. Definitions.

The following words and phrases when used in this part shall

have, unless the context clearly indicates otherwise, the

meanings given to them in this section:

"Accumulated deductions." The total of pickup contributions

[and], eligible roll-ins made under section 8507(l) (relating to

rights and duties of school employees, members and

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participants), the contributions paid into the fund by the

member on account of current school service, previous school

service, or creditable nonschool service, excess interest

awarded under section 8523(d) (relating to members' savings

account and cash balance account) on member contributions, and

the statutory interest credited on all such contributions.

"Accumulated employer defined contributions." The total of

the employer defined contributions paid into the trust on

account of a participant's school service together with any

investment earnings and losses and adjustments for fees, costs

and expenses credited or charged thereon.

"Accumulated mandatory participant contributions." The total

of the mandatory pickup participant contributions paid into the

trust on account of a participant's school service together with

any investment earnings and losses and adjustments for fees,

costs and expenses credited or charged thereon.

"Accumulated total defined contributions." The total of the

accumulated mandatory participant contributions, accumulated

employer defined contributions and accumulated voluntary

contributions, reduced by any distributions, standing to the

credit of a participant in an individual investment account in

the trust.

"Accumulated voluntary contributions." The total of

voluntary contributions paid into the trust by a participant and

any amounts rolled over by a participant or transferred by a

direct trustee-to-trustee transfer into the trust together with

any investment earnings and losses and adjustments for fees,

costs and expenses credited or charged thereon.

"Activated military service." Military service by a member

of a reserve component of the armed forces, pursuant to an order

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on or after July 1, 1990, and prior to July 1, 2013, to enter

into active military service, other than an order to enter into

active duty to meet periodic training requirements, who was an

active member of the system immediately preceding the order into

active military service and to whom the military leave

provisions of 51 Pa.C.S. Ch. 73 (relating to military leave of

absence) do not apply.

"Active member." A school employee for whom pickup

contributions are being made to the fund or for whom such

contributions otherwise required for current school service are

not being made solely by reason of any provision of this part

limiting compensation or relating to the limitations under

section 401(a)(17) or 415(b) of the Internal Revenue Code of

1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) or 415(b)).

"Active participant." A school employee for whom mandatory

pickup participant contributions are being made to the trust or

for whom such contributions otherwise required for current

school service are not being made solely by reason of any

provision of this part relating to the limitations under section

401(a)(17) or 415 of the Internal Revenue Code of 1986 (Public

Law 99-514, 26 U.S.C. § 401(a)(17) or 415) or any provision of

this part limiting compensation.

"Actuarially equivalent." Equal present values, computed on

the basis of statutory interest and the mortality tables adopted

by the board.

"Actuary." The consultant to the board who shall be:

(1) a member of the American Academy of Actuaries;

(2) an individual who has demonstrated to the

satisfaction of the Insurance Commissioner of Pennsylvania

that he has the educational background necessary for the

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practice of actuarial science and has had at least seven

years of actuarial experience; or

(3) a firm, partnership, or corporation of which at

least one member meets the requirements of paragraph (1) or

(2).

"Alternate payee." Any spouse, former spouse, child or

dependent of a member or participant who is recognized by a

domestic relations order as having a right to receive all or a

portion of the moneys payable to that member or participant

under this part.

"Alternative investment." An investment in a private equity

fund, private debt fund, venture fund, real estate fund, hedge

fund or absolute return fund.

"Alternative investment vehicle." A limited partnership,

limited liability company or any other legal vehicle for

authorized investments under section 8521(i) (relating to

management of fund and accounts) through which the system makes

an alternative investment.

"Annuitant." Any member on or after the effective date of

retirement until his annuity is terminated.

"Approved domestic relations order." Any domestic relations

order which has been determined to be approved in accordance

with section 8533.1 (relating to approval of domestic relations

orders).

"Approved leave of absence." [A] As applied to all classes

of membership except Class T-I, a leave of absence for activated

military service or which has been approved by the employer for

sabbatical leave, service as an exchange teacher, service with a

collective bargaining organization or professional study. As

applied to Class T-I members, a leave of absence that has been

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approved as a contributory leave by the employer for sabbatical

leave, service as an exchange teacher, service with a collective

bargaining organization or professional study.

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

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

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

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

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

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

service, the rate of 3%.

"Beneficiary." [The] In the case of the system, the person

or persons last designated in writing to the board by a member

to receive his accumulated deductions or a lump sum benefit upon

the death of such member. In the case of the plan, the person or

persons last designated in writing to the board by a participant

to receive the participant's vested accumulated total defined

contributions upon the death of the participant.

"Board." The Public School Employees' Retirement Board or

the Public School Employes' Retirement Board.

"Cash balance account." The ledger account into which

members contribute cash balance member contributions, together

with employer contributions, interest and excess interest, as

provided in this part.

"Cash balance member contributions." For members in a class

other than Class T-I, the amount voluntarily contributed by such

member and eligible amounts rolled in to the cash balance

account, as provided in this part.

"Class of service multiplier."

Class of service Multiplier

T-A .714

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T-B .625

T-C 1.000

T-D 1.000

T-E 1.000

T-F 1.000

"Combined service employee." A current or former school

employee who is both a member of the system and a participant in

the plan.

"Commissioner." The Commissioner of the Internal Revenue

Service.

"Compensation." Pickup contributions and mandatory pickup

participant contributions plus any remuneration received as a

school employee excluding reimbursements for expenses incidental

to employment and excluding any bonus, severance payments, any

other remuneration or other emolument received by a school

employee during his school service which is not based on the

standard salary schedule under which he is rendering service,

payments for unused sick leave or vacation leave, bonuses or

other compensation for attending school seminars and

conventions, payments under health and welfare plans based on

hours of employment or any other payment or emolument which may

be provided for in a collective bargaining agreement which may

be determined by the Public School Employees' Retirement Board

to be for the purpose of enhancing compensation as a factor in

the determination of final average salary, and, for

participants, excluding payments for military leave and any

other payments made by an employer while on USERRA leave, leave

of absence granted under 51 Pa.C.S. § 4102 (relating to leaves

of absence for certain government employees), military leave of

absence granted under 51 Pa.C.S. § 7302 (relating to granting

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military leaves of absence), leave granted under section 1178 of

the act of March 10, 1949 (P.L.30, No.14), known as the Public

School Code of 1949, or other types of military leave, including

other types of leave payments, stipends, differential wage

payments as defined in IRC § 414(u)(12) and any other payments,

provided, however, that the limitation under section 401(a)(17)

of the Internal Revenue Code of 1986 (Public Law 99-514, 26

U.S.C. § 401(a)(17)) taken into account for the purpose of

member contributions, including regular or joint coverage member

contributions, regardless of class of service, shall apply to

each member who first became a member of the Public School

Employes' Retirement System on or after July 1, 1996, and who by

reason of such fact is a noneligible member subject to the

application of the provisions of section 8325.1 (relating to

annual compensation limit under IRC § 401(a)(17))[.] and shall

apply to each participant. Notwithstanding the above, for Class

T-E and Class T-F service performed on or after July 1, 2016,

compensation for each fiscal year, for purposes of determining

final average salary and applying the basic contribution rate,

shall not exceed the Social Security taxable wage base in effect

at the beginning of the fiscal year. The limit shall be applied

separately to each employer of a member.

"Concurrent service." Simultaneously credited school and

State service.

"Creditable nonschool service." Service other than service

as a school employee for which an active member may obtain

credit in the system.

"Credited service." School or creditable nonschool service

for which the required contributions have been made to the fund,

or for which the contributions otherwise required for such

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service were not made solely by reason of any provision of this

part limiting compensation or relating to the limitations under

section 401(a)(17) or 415(b) of the Internal Revenue Code of

1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) or 415(b)), or

for which salary deductions to the system or lump sum payments

have been agreed upon in writing.

"Date of termination of service." The latest of the

following dates:

(1) the last [date] day of service for which pickup

contributions are made for an active member or[,] for which

the contributions otherwise required for such service were

not made solely by reason of any provision of this part

limiting compensation or relating to the limitations under

section 401(a)(17) or 415 of the Internal Revenue Code of

1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) or 415;

(2) in the case of an inactive member or an inactive

participant, the effective date of his resignation or the

date his employment is formally discontinued by his employer

or two years following the last day of service for which

contributions were made, whichever is earliest[.]; or

(3) in the case of a combined service employee, the

latest of the dates in paragraph (1) or (2).

"Disability annuitant." A member on or after the effective

date of disability until his disability annuity or the portion

of his disability annuity payments in excess of any annuity to

which he may otherwise be entitled is terminated.

"Distribution." Payment of all or any portion of a person's

interest in either the Public School Employees' Retirement Fund

or the School Employees' Defined Contribution Trust, or both,

which is payable under this part.

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"Domestic relations order." Any judgment, decree or order,

including approval of a property settlement agreement, entered

on or after the effective date of this definition by a court of

competent jurisdiction pursuant to a domestic relations law

which relates to the marital property rights of the spouse or

former spouse of a member or participant, including the right to

receive all or a portion of the moneys payable to that member or

participant under this part in furtherance of the equitable

distribution of marital assets. The term includes orders of

support as that term is defined by 23 Pa.C.S. § 4302 (relating

to definitions) and orders for the enforcement of arrearages as

provided in 23 Pa.C.S. § 3703 (relating to enforcement of

arrearages).

"Effective date of retirement." The first day following the

date of termination of service of a member if he has properly

filed an application for an annuity within 90 days of such date

or:

(1) In the case of a member who applies for an annuity

subsequent to 90 days after termination of service, the date

of filing such application or the date specified on the

application, whichever is later.

(2) In the case of a vestee who files an application for

an annuity within 90 days of his superannuation age, the

attainment of such age.

(3) In the case of a vestee who defers the filing of an

application for an annuity to a date later than 90 days

following attainment of superannuation age, the date of

filing or the date specified on the application, whichever is

later.

(4) In the case of a finding of disability, the date

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certified by the board as the effective date of disability.

"Eligible annuitants." All current and prospective

annuitants with 24 1/2 or more eligibility points and all

current and prospective disability annuitants. Beginning January

1, 1995, "eligible annuitants" shall include members other than

Class T-I members with 15 or more eligibility points who

terminated or who terminate school service on or after attaining

superannuation retirement age and who are annuitants with an

effective date of retirement after superannuation age.

"Eligibility points." Points which are accrued by an active

member, a multiple service member who is an active member of the

State Employees' Retirement System for credited service or by a

member who has been reemployed from USERRA leave or dies while

performing USERRA leave and are used in the determination of

eligibility for benefits as provided in section 8306 (relating

to eligibility points). Class T-I members shall be deemed to

accrue one eligibility point for each fiscal year in which

contributions have been made to the fund.

"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 College of

Technology, and the Western Pennsylvania School for the Deaf.

"Employer defined contributions." Contributions equal to

2.59% of an active participant's compensation that are made by

an employer for current service to the trust to be credited in

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the active participant's individual investment account.

"Excess interest." The investment earnings of the fund

attributable to Class T-I members and members who have elected

to contribute to the cash balance account, calculated in

accordance with section 8523(d) (relating to members' savings

account and cash balance account).

"Final average salary." The highest average compensation

received as an active member during any three nonoverlapping

periods of 12 consecutive months with the compensation for part-

time service being annualized on the basis of the fractional

portion of the school year for which credit is received; except,

if the employee was not a member for three such periods, the

total compensation received as an active member annualized in

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

periods of membership; in the case of a member with multiple

service credit, the final average salary shall be determined by

reference to compensation received by him as a school employee

or a State employee or both; and, in the case of a noneligible

member, subject to the application of the provisions of section

8325.1 (relating to annual compensation limit under IRC § 401(a)

(17)). Final average salary shall be determined by including in

compensation, payments deemed to have been made to a member

reemployed from USERRA leave to the extent member contributions

have been made as provided in section 8302(d)(2) (relating to

credited school service) and payments made to a member on leave

of absence under 51 Pa.C.S. § 4102 (relating to leaves of

absence for certain government employees) as provided in section

8302(d)(6). Notwithstanding the above, for Class T-E and Class

T-F service performed on or after July 1, 2016, compensation to

be used for final average salary calculation shall not exceed

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the Social Security taxable wage base in effect at the beginning

of the fiscal year.

"Full coverage member." Any member for whom regular member

pickup contributions are being picked up or who has paid or has

agreed to pay to the fund the actuarial equivalent of regular

member contributions due on account of service prior to January

1, 1983.

"Fund." The Public School Employees' Retirement Fund.

"Governmental entity." Board of school directors, board of

public education, intermediate unit board of directors, area

vocational-technical board, any governing board of any agency or

authority created by them, and the Commonwealth.

"Inactive member." A member for whom no pickup contributions

are being made to the fund, except in the case of an active

member for whom such contributions otherwise required for

current school service are not being made solely by reason of

any provision of this part relating to the limitations under

section 401(a)(17) or 415(b) of the Internal Revenue Code of

1986 (Public Law 99-514, 26 U.S.C. § 401(a)(17) or 415(b)) or

because the member is on USERRA leave, who has accumulated

deductions standing to his credit in the fund and for whom

contributions have been made within the last two school years or

a multiple service member who is active in the State Employees'

Retirement System.

"Inactive participant." A participant for whom no mandatory

pickup participant contributions are being made to the trust,

except in the case of an active participant for whom such

contributions otherwise required for current school service are

not being made solely by reason of any provision of this part

relating to limitations under section 401(a)(17) or 415 of the

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

401(a)(17) or 415), who has vested accumulated total defined

contributions standing to his credit in the trust and who has

not filed an application for a distribution.

"Individual investment account." The account in the trust to

which are credited the amounts of the contributions made by a

participant and the participant's employer in accordance with

the provisions of this part, together with all investment

earnings after deduction for fees, costs and expenses,

investment losses and charges for distributions.

"Intervening military service." Active military service of a

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

system immediately preceding his induction into the armed

services or forces of the United States in order to meet a draft

obligation excluding any voluntary extension of such

obligational service and who becomes a school employee and an

active member of the system within 90 days of the expiration of

such service.

"IRC." The Internal Revenue Code of 1986, as designated and

referred to in section 2 of the Tax Reform Act of 1986 (Public

Law 99-514, 100 Stat. 2085, 2095). A reference in this part to

"IRC § " shall be deemed to refer to the identically numbered

section and subsection or other subdivision of such section in

26 United States Code (relating to Internal Revenue Code).

"Irrevocable beneficiary." The person or persons permanently

designated by a member or participant in writing to the board

pursuant to an approved domestic relations order to receive all

or a portion of the accumulated deductions, vested accumulated

total defined contributions or lump sum benefit payable upon the

death of such member or participant.

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"Irrevocable successor payee." The person permanently

designated in writing by a participant to the board pursuant to

an approved domestic relations order to receive one or more

distributions from the plan upon the death of such participant.

"Irrevocable survivor annuitant." The person permanently

designated by a member in writing to the board pursuant to an

approved domestic relations order to receive an annuity upon the

death of such member.

"Joint coverage member." Any member who agreed prior to

January 1, 1966 to make joint coverage member contributions to

the fund and has not elected to become a full coverage member.

"Joint coverage member contributions." Regular member

contributions reduced for a joint coverage member.

"Leave for service with a collective bargaining

organization." Paid leave granted to an active member or active

participant by an employer for purposes of working full time for

or serving full time as an officer of a Statewide employee

organization or a local collective bargaining representative

under the act of July 23, 1970 (P.L.563, No.195), known as the

Public Employe Relations Act: Provided, That greater than one-

half of the members of the employee organization are active

members of the system or active participants of the plan; that

the employer shall fully compensate the member or active

participant, including, but not limited to, salary, wages,

pension and retirement contributions and benefits, other

benefits and seniority, as if he were in full-time active

service; and that the employee organization shall fully

reimburse the employer for such salary, wages, pension and

retirement contributions and benefits and other benefits and

seniority.

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"Mandatory pickup participant contributions." Contributions

equal to 3% of compensation that are made by the employer for

active participants for current service that are picked up by

the employer and credited in the trust.

"Maternity leave of absence." An involuntary leave of

absence required by the employer because of the pregnancy of the

member and commencing prior to May 17, 1975.

"Member." Active member, inactive member, annuitant, or

vestee.

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

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.

"Military service." All active military service for which a

member has received a discharge other than an undesirable, bad

conduct, or dishonorable discharge.

"Multiple service." Credited service of a member other than

a Class T-I member or Class TDB member in the State Employees'

Retirement System who has elected to combine his credited

service in both the Public School Employees' Retirement System

and the State Employees' Retirement System.

"Noneligible member." For the purposes of section 8325.1

(relating to annual compensation limit under IRC § 401(a)(17)),

a member who first became a member on or after July 1, 1996.

"Participant." An active participant, inactive participant

or participant receiving distributions.

"Participating eligible annuitants." All eligible annuitants

who are enrolled or elect to enroll in a health insurance

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program approved by the Public School Employees' Retirement

Board.

"Participant receiving distributions." A participant in the

plan who has commenced receiving distributions from his

individual investment account but who has not received a total

distribution of his vested interest in the individual investment

account.

"Pickup contributions." Regular or joint coverage member

contributions and shared-risk member contributions and mandatory

cash balance account contributions which are made by the

employer for active members for current service on and after

January 1, 1983.

"Plan." The School Employees' Defined Contribution Plan as

established by the provisions of this part and the board.

"Plan document." The documents created by the board under

section 8402 (relating to plan document) that contain the terms

and provisions of the plan and trust as established by the board

regarding the establishment, administration and investment of

the plan and trust.

"Previous school service." Service [rendered] as a school

employee including service in any summer school conducted by a

school district of the Commonwealth, but excluding service

rendered during which the school employee was or could have been

a participant in the plan, prior to the member's most recent

entrance in the system.

"Public school." Any or all classes or schools within this

Commonwealth conducted under the order and superintendence of

the Department of Education including, but not limited to: all

educational classes of any employer charged with the

responsibility of public education within this Commonwealth as

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well as those classes financed wholly or in part by the Federal

Government, 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 of Technology, and the

Pennsylvania State Oral School for the Deaf.

"Public School Code." The act of March 10, 1949 (P.L.30,

No.14), known as the Public School Code of 1949.

"Reemployed from USERRA leave." Resumption of active

membership or active participation as a school employee after a

period of USERRA leave, if the resumption of active membership

or active participation was within the time period and under

conditions and circumstances such that the school employee was

entitled to reemployment rights under 38 U.S.C. Ch. 43 (relating

to employment and reemployment rights of members of the

uniformed services).

"Regular member contributions." The product of the basic

contribution rate and the compensation of the member.

"Required beginning date." The latest date by which

distributions of a participant's interest in his individual

investment account must commence under the Internal Revenue Code

of 1986 (Public Law 99-514, 26 U.S.C. § 401(a)(9)).

"Reserve component of the armed forces." The United States

Army Reserve, United States Navy Reserve, United States Marine

Corps Reserve, United States Coast Guard Reserve, United States

Air Force Reserve, Pennsylvania Army National Guard and

Pennsylvania Air National Guard.

"Salaried employee." A school employee who is compensated on

the basis of an annual salary.

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"Salary deductions." The amounts certified by the board,

deducted from the compensation of an active member or active

participant or the State service compensation of a multiple

service member who is an active member of the State Employees'

Retirement System or active participant of the School Employees'

Defined Contribution Plan and paid into the fund or trust.

"School employee." Any person engaged in work relating to a

public school for any governmental entity and for which work he

is receiving regular remuneration as an officer, administrator

or employee excluding, however, any independent contractor or a

person compensated on a fee basis.

"School entity." A school district of any class,

intermediate unit or an area vocational-technical school, as

provided for under the act of March 10, 1949 (P.L.30, No.14),

known as the Public School Code of 1949.

"School service." Service rendered as a school employee.

"School year." The 12-month period which the governmental

entity uses for purposes of administration regardless of the

actual time during which a member renders service.

"Severance payments." Any payments for unused vacation or

sick leave and any additional compensation contingent upon

retirement including payments in excess of the scheduled or

customary salaries provided for members within the same

governmental entity with the same educational and experience

qualifications who are not terminating service.

"Shared-risk contribution rate." The [additional]

contribution rate that is [added] applied to the basic

contribution rate for Class T-D, T-E and T-F members, as

provided for in section 8321(b) and (c) (relating to regular

member contributions for current service).

20150SB1071PN1410 - 20 -

"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 in

that class. 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 in that class. For Class T-E credited service

of a member, an annuity equal to 2% of the final average salary,

multiplied by the total number of years and fractional part of a

year of credited service of a member. For Class T-F credited

service of a member, an annuity equal to 2.5% of the final

average salary, multiplied by the total number of years and

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

Class T-I members, and for monies in the cash balance account of

members of other classes, an annuity that is actuarially

equivalent to the balance of the member's savings account or the

cash balance account, as applicable, calculated using 120% of

the mid-term Treasury note rate in effect on the effective date

of retirement of the member.

"State Employees' Defined Contribution Plan." The defined

contribution plan for State employees established by 71 Pa.C.S.

Pt. XXV (relating to retirement for State employees and

officers).

"State Employees' Retirement System." The retirement system

established by the act of June 27, 1923 (P.L.858, No.331) and

codified by the act of June 1, 1959 (P.L.392, No.78) and by Part

XXV of Title 71 (relating to retirement for State employees and

officers), added March 1, 1974 (P.L.125, No.31).

"State service." Service rendered as a State employee and

20150SB1071PN1410 - 21 -

credited as service in the State Employees' Retirement System.

"Statutory interest." Interest at 4% per annum, compounded

annually.

"Successor payee." The person or persons last designated in

writing by a participant to the board to receive one or more

distributions upon the death of such participant.

"Superannuation annuitant." An annuitant whose annuity first

became payable on or after the attainment of superannuation age

and who is not a disability annuitant.

"Superannuation or normal retirement age."

Class of service Age

T-A

62 or any age upon accrual of

35 eligibility points

T-B 62

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

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

"Survivor annuitant." The person or persons last designated

by a member or participant under a joint and survivor annuity

option to receive an annuity upon the death of such member. A

20150SB1071PN1410 - 22 -

combined service employee may designate different persons to be

survivor annuitants for the benefits from the system and

beneficiaries or successor payees for the benefits from the

plan.

"System." The Public School Employes' Retirement System of

Pennsylvania as established by the act of July 18, 1917

(P.L.1043, No.343), and codified by the act of June 1, 1959

(P.L.350, No.77).

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

contribution rate and the shared-risk contribution rate.

"Trust." The School Employees' Defined Contribution Trust

established under Chapter 84 (relating to School Employees'

Defined Contribution Plan).

"USERRA." The Uniformed Services Employment and Reemployment

Rights Act, 38 U.S.C. Ch. 43 (relating to employment and

reemployment rights of members of the uniformed services).

"USERRA leave." Any period of time for service in the

uniformed services as defined in 38 U.S.C. Ch. 43 (relating to

employment and reemployment rights of members of the uniformed

services) by a school employee or former school employee or

participant who terminated school service to perform the service

in the uniformed services, if the current or former school

employee or participant is entitled to reemployment rights under

38 U.S.C. Ch. 43 with respect to the uniformed service.

"Valuation interest." Interest at 5 1/2% per annum,

compounded annually and applied to all accounts of the fund

other than the members' savings account.

"Vestee." A member with five or more eligibility points in a

class of service other than Class T-E, Class T-F or Class T-I

who has terminated school service, has left his accumulated

20150SB1071PN1410 - 23 -

deductions in the fund and is deferring filing of an application

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

a member with ten or more eligibility points who has terminated

school service, has left his accumulated deductions in the fund

and is deferring filing of an application for receipt of an

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

school service, has left his accumulated deductions in the fund

and is deferring filing of an application for receipt of

annuity.

"Voluntary contributions." Contributions made by a

participant to the trust and credited to his individual

investment account in excess of his mandatory pickup participant

contributions, and contributions made by a member to the system

and credited to his cash balance account in excess of his

mandatory pickup contributions, either by salary deductions paid

through the employer or by an eligible rollover or direct

trustee-to-trustee transfers.

Section 202. Section 8103 of Title 24 is amended by adding

subsections to read:

§ 8103. Construction of part.

* * *

participant.--As used in this part:

(1) The term "inactive member" does not include a

combined service employee who is an "inactive participant,"

unless the combined service employee is concurrently employed

in a position in which such employee is a member of the

system.

(2) The term "inactive participant" does not include a

combined service employee who is an "inactive member," unless

20150SB1071PN1410 - 24 -

the combined service employee is concurrently employed in a

position in which such employee is a participant in the plan.

(d) Provisions severable.--The provisions of this part are

severable and if any of its provisions shall be held to be

unconstitutional, the decision of the court shall not affect or

impair any of the remaining provisions. It is hereby declared to

be the legislative intent that this part would have been adopted

had such unconstitutional provisions not been included.

(e) References to certain Federal statutes.--References in

this part to the IRC or the Uniformed Services Employment and

Reemployment Rights Act of 1994 (Public Law 103-353, 108 Stat.

3149), including administrative regulations promulgated under

the IRC or the Uniformed Services Employment and Reemployment

Rights Act of 1994, are intended to include laws and regulations

in effect on the effective date of this section and amended,

supplemented or supplanted on and after the effective date of

this section.

(f) Construction.--

(1) This part may not be construed to mean that the

limitations on benefits or other requirements under IRC §

401(a) or other applicable provisions of the IRC that are

applicable to participants in the plan do not apply to the

participants or to the members of the system and the benefits

payable under Part IV.

(2) This part may not be construed to mean that an

interpretation or application of the provisions of Part IV or

benefits available to members of the Public School Employees'

Retirement System was not in accordance with the provisions

of Part IV or other applicable law, including the IRC and the

Uniformed Services Employment and Reemployment Rights Act of

20150SB1071PN1410 - 25 -

1994 before the effective date of this section.

(3) This part may not be construed to mean that the

release or publicizing of a record, material or data that

would not constitute a public record under section 8502(e)(2)

(relating to administrative duties of board) is a violation

of the fiduciary duties of the board.

(g) Applicability.--This part shall apply to a record,

material or data under section 8502(e)(2) notwithstanding

whether:

(1) the record, material or data was created, generated

or stored before the effective date of this section;

(2) the record, material or data was previously released

or made public; or

(3) a request for the record, material or data was made

or is pending final response under the former act of June 21,

1957 (P.L.390, No.212), referred to as the Right-to-Know Law,

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

Right-to-Know Law.

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

law, no collective bargaining agreement nor any arbitration

award between the school employer and its employees or their

collective bargaining representatives shall be construed to

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

to administer pension or retirement benefits not set forth under

this part or to require action by any other government body

pertaining to pension or retirement benefits or rights of school

employees.

Section 203. Title 24 is amended by adding sections to read:

§ 8103.1. Reference to Public School Employees' Retirement

System.

20150SB1071PN1410 - 26 -

As of the effective date of this section, unless the context

clearly indicates otherwise, a reference to the Public School

Employees' Retirement System in a statutory provision, other

than this part and 71 Pa.C.S. Pt. XXV (relating to retirement

for State employees and officers), shall include a reference to

the plan, and a reference to the Public School Employees'

Retirement Fund shall include a reference to the trust.

§ 8103.2. Notice to members and participants.

Notice by publication, including, without being limited to,

newsletters, newspapers, forms, first class mail, letters,

manuals, and electronic notice, including, but not limited to,

e-mail or internet websites distributed or made available to

members and participants in a manner reasonably calculated to

give actual notice of the provisions of this part that require

notice to members and participants shall be deemed sufficient

notice for all purposes.

Section 204. Sections 8301, 8302, 8303, 8303.1 and 8304(a)

of Title 24 are amended to read:

§ 8301. Mandatory and optional membership.

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

mandatory as of the effective date of employment for all school

employees except the following:

(1) Any officer or employee of the [Department of

Education] department, State-owned educational institutions,

community colleges, area vocational-technical schools,

technical institutes, or [the] The Pennsylvania State

University and who is a member of the State Employees'

Retirement System or a member of another retirement program

approved by the employer.

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

20150SB1071PN1410 - 27 -

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

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

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

year or annuitant who returns to school service under the

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

annuities).

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

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

administers, supervises, or teaches classes financed wholly

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

in such service.

(4) Any part-time school employee, other than a school

employee eligible for Class T-I membership, who has an

individual retirement account pursuant to the Federal act of

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

the Employee Retirement Income Security Act of 1974.

(b) Prohibited membership.--The school employees categorized

in subsection (a)(1) and (2) shall not have the right to elect

membership in the system.

in subsection (a)(3) and, if otherwise eligible, subsection

(a)(4) shall have the right to elect membership in the system.

Once such election is exercised, membership shall commence from

the original date of eligibility and shall continue until the

termination of such service.

(d) Mandatory participation in the plan.--A school employee

who is a mandatory member of Class T-I shall also be a mandatory

participant in the plan as of the effective date of membership

in the system.

(e) Optional participation in the plan.--Class T-E and Class

20150SB1071PN1410 - 28 -

T-F members may participate in the plan on or after July 1,

2016, to the extent that the compensation of the participant

exceeds the Social Security taxable wage base in effect at the

beginning of the fiscal year, as provided in section 8404(b)

(relating to participant contributions).

(f) Optional contributions to the cash balance account.--

Class T-C members may contribute to the cash balance account up

to 3% of compensation, as provided in this part. Class T-D,

Class T-E and Class T-F members may contribute to the cash

balance account up to 3% of compensation, but limited to the

Social Security taxable wage base in effect at the beginning of

the fiscal year, as provided in this part. Contributions may be

changed as provided in this part or as set forth in board

policy.

(g) Certain agreements.--The agreement of an employer to

make contributions to the fund or to enroll its employees as

members in the system shall be deemed to be an agreement to make

contributions to the trust or to enroll its employees in the

plan.

§ 8302. Credited school service.

(a) Computation of credited service.--In computing credited

school service of a member for the determination of benefits, a

full-time salaried school employee shall receive one year of

credit for each school year or the corresponding fraction

thereof, in accordance with the proportion of the full school

year for which the required regular member contributions have

been made to the fund, or for which such contributions otherwise

required for such service were not made to the fund solely by

reason of any provision of this part relating to the limitations

under IRC § 401(a)(17) or 415(b) or another provision of this

20150SB1071PN1410 - 29 -

part limiting compensation. A per diem or hourly school employee

shall receive one year of credited service for each

nonoverlapping period of 12 consecutive months in which he is

employed and for which contributions are made to the fund, or

would have been made to the fund but for such limitations under

the IRC, or another provision of this part limiting compensation

for at least 180 full-day sessions or 1,100 hours of employment.

If such member was employed and contributions were made to the

fund for less than 180 full-day sessions or 1,100 hours, he

shall be credited with a fractional portion of a year determined

by the ratio of the number of full-day sessions or hours of

service actually rendered and for which contributions are made

to the fund to 180 full-day sessions or 1,100 hours, as the case

may be. A part-time salaried employee shall be credited with the

fractional portion of the year which corresponds to the service

actually rendered and for which contributions are or would have

been made to the fund in relation to the service required as a

comparable full-time salaried employee. In no case shall a

member receive more than one year of credited service for any 12

consecutive months or a member who has elected multiple service

receive an aggregate in the two systems of more than one year of

credited service for any 12 consecutive months.

(b) Approved leaves of absence.--An active member shall

receive credit or vesting credit, as applicable, and an active

participant shall receive vesting credit, for an approved leave

of absence provided that:

(1) the member returns for a period at least equal to

the length of the leave or one year as a member of the system

or the participant returns to school service as an active

participant in the plan, whichever is less, to the school

20150SB1071PN1410 - 30 -

district which granted his leave, unless such condition is

waived by the employer; and

(2) the proper contributions are made by the member and

the employer[.] or by the active participant and the

employer. In the case of a Class T-I member, the proper

contributions must be made during the leave except for USERRA

leave.

* * *

in the system shall be cancelled if a member withdraws his

accumulated deductions.

(d) Credit for military service.--A school employee who has

performed USERRA leave may receive credit in the system as

follows:

(1) For purposes of determining whether a member is

eligible to receive credited service in the system for a

period of active military service, other than active duty

service to meet periodic training requirements, rendered

after August 5, 1991, and that began before the effective

date of this paragraph, the provisions of 51 Pa.C.S. Ch. 73

(relating to military leave of absence) shall apply to all

individuals who were active members of the system when the

period of military service began, notwithstanding if the

member is not defined as an employee under 51 Pa.C.S. § 7301

(relating to definitions). School employees may not receive

service credit or exercise the options under 51 Pa.C.S. §

7306(a), (b) and (c) (relating to retirement rights) for

military leaves that begin on or after the effective date of

this subsection, except otherwise provided under this

subsection.

20150SB1071PN1410 - 31 -

(2) A school employee who has performed USERRA leave may

receive credit as provided by this paragraph.

(i) A school employee who is reemployed from USERRA

leave as an active member of the system shall be treated

as not having incurred a break in school service by

reason of the USERRA leave and shall be granted

eligibility points as if the school employee had not been

on the USERRA leave. If a school employee who is

reemployed from USERRA leave as an active member of the

system subsequently makes regular member contributions,

shared-risk member contributions and any other member

contributions in the amounts and in the time periods

required by 38 U.S.C. Ch. 43 (relating to employment and

reemployment rights of members of the uniformed services)

and IRC § 414(u) as if the school employee had continued

in his school office or employment and performed school

service and been compensated during the period of USERRA

leave, then the school employee shall be granted school

service credit for the period of USERRA leave. The

employee shall have his benefits, rights and obligations

determined under this part as if he was an active member

who performed creditable school service during the USERRA

leave in the job position that he would have held had he

not been on USERRA leave and received the compensation on

which the member contributions to receive school service

credit for the USERRA leave were determined.

(ii) For purposes of determining whether a school

employee has made the required employee contributions for

school service credit for USERRA leave, if an employee

who is reemployed from USERRA leave as an active member

20150SB1071PN1410 - 32 -

terminates school service or dies in school service

before the expiration of the allowed payment period,

school service credit for the USERRA leave shall be

granted as if the required member contributions were paid

the day before termination or death. The amount of the

required member contributions shall be treated as an

incomplete payment subject to the provisions of section

8325 (relating to incomplete payments). Upon a subsequent

return to school service or to State service as a

multiple service member, the required member

contributions treated as incomplete payments shall be

treated as member contributions that were either

withdrawn in a lump sum at termination or paid as a lump

sum under section 8345(a)(4) (relating to member's

options). For this purpose, the exclusion of Class T-E

and Class T-F members from electing a form of payment

under section 8345(a)(4)(iii) shall be ignored.

(iii) A school employee who is reemployed from

USERRA leave as an active member of the system and who

does not make the required member contributions or makes

only part of the required member contributions within the

allowed payment period shall not be:

(A) Granted credited service for the period of

USERRA leave for which the required member

contributions were not timely made.

(B) Eligible to subsequently make contributions.

nonschool service credit for the period of USERRA

leave for which the required member contributions

were not timely made.

20150SB1071PN1410 - 33 -

(3) A school employee who is a member of the system and

performs USERRA leave from which the employee could have been

reemployed from USERRA leave had the school employee returned

to school service in the time frames required by 38 U.S.C.

Ch. 43 for reemployment rights, but did not do so, shall be

able to receive creditable nonschool service as

nonintervening military service for the period of USERRA

leave if the employee later returns to school service and is

otherwise eligible to purchase the service as nonintervening

military service.

(4) [A school employee] An active or inactive member

who, on or after the effective date of this subsection, is

granted a leave of absence under section 1178 of the Public

School Code, a leave of absence under 51 Pa.C.S. § 4102

(relating to leaves of absence for certain government

employees) or a military leave under 51 Pa.C.S. Ch. 73, that

is not USERRA leave shall be able to receive creditable

nonschool service as nonintervening military service should

the employee return to school service as an active member of

the system and is otherwise eligible to purchase the service

as nonintervening military service.

(5) If a member dies while performing USERRA leave, the

beneficiaries or survivor annuitants of the deceased member

shall be entitled to any additional benefits, including

eligibility points, other than benefit accruals relating to

the period of qualified military service, provided under this

part as if the member resumed and then terminated employment

on account of death.

(6) A school employee who is on a leave of absence from

his duties as a school employee and for which 51 Pa.C.S. §

20150SB1071PN1410 - 34 -

4102 provides that he is not to suffer a loss of pay, time or

efficiency shall not be an active member, receive service

credit or make member contributions for the leave of absence

except as provided for in this part. Notwithstanding this

paragraph, any pay the member receives under section 1178 of

the Public School Code or 51 Pa.C.S. § 4102 shall be included

in the determination of final average salary and other

calculations in the system utilizing compensation as if the

payments were compensation under this part.

(e) Military service by a participant.--A participant who

has performed USERRA leave shall be treated and may make

contributions as follows:

(1) A participant who is reemployed from USERRA leave

shall be treated as not having incurred a break in school

service by reason of the USERRA leave and shall be granted

vesting credit as if the participant had not been on USERRA

leave. If a participant who is reemployed from USERRA leave

subsequently makes mandatory pickup participant contributions

in the amounts and in the time periods required by 38 U.S.C.

Ch. 43 (relating to employment and reemployment rights of

members of the uniformed services) and IRC § 414(u) as if the

participant had continued in his school employment and

performed school service and been compensated during the

period of USERRA leave, then the participant's employer shall

make the corresponding employer defined contributions. Such

an employee shall have his contributions, benefits, rights

and obligations determined under this part as if he was an

active participant who performed school service during the

USERRA leave in the job position that he would have held had

he not been on USERRA leave and received the compensation on

20150SB1071PN1410 - 35 -

which the mandatory pickup participant contributions to

receive school service credit for the USERRA leave were

determined, including the right to make voluntary

contributions on such compensation as permitted by law.

(2) A participant who is reemployed from USERRA leave

and does not make the mandatory pickup participant

contributions or makes only part of the mandatory pickup

participant contributions within the allowed payment period

shall not be eligible to make mandatory pickup participant

contributions and voluntary contributions at a later date for

the period of USERRA leave for which the mandatory pickup

participant contributions were not timely made.

(3) A participant who performs USERRA leave from which

the employee could have been reemployed from USERRA leave had

the school employee returned to school service in the time

frames required by 38 U.S.C. Ch. 43 for reemployment rights,

but did not do so, shall not be eligible to make mandatory

pickup participant contributions or voluntary contributions

for the period of USERRA leave should the employee later

return to school service and be a participant in the plan.

(4) An active participant or inactive participant who,

on or after the effective date of this subsection, is granted

a leave of absence under 51 Pa.C.S. § 4102 (relating to

leaves of absence for certain government employees) or a

military leave under 51 Pa.C.S. Ch. 73 (relating to military

leave of absence) that is not USERRA leave shall not be

eligible to make mandatory pickup participant contributions

or voluntary contributions during or for the leave of absence

or military leave, and shall not have employer defined

contributions made during such leave, without regard to

20150SB1071PN1410 - 36 -

whether or not the participant received salary, wages,

stipends, differential wage payments or other payments from

his employer during the leave, notwithstanding any provision

to the contrary in 51 Pa.C.S. § 4102 or Ch. 73.

(5) If a participant dies while performing USERRA leave,

then the beneficiaries or successor payees, as the case may

be, of the deceased participant are entitled to any

additional benefits, other than benefit accruals relating to

the period of qualified military service, provided under this

part had the participant resumed and then terminated

employment on account of death.

§ 8303. Eligibility points for retention and reinstatement of

service credits.

(a) Accrued credited service.--Eligibility points shall be

computed in accordance with section 8306 (relating to

eligibility points) with respect to all credited service accrued

as of the effective date of this part.

(b) Future school service.--Every active member of the

system other than a Class T-I member shall accrue an eligibility

point for each year of school service rendered subsequent to the

effective date of this part. Class T-I members shall be deemed

to accrue one eligibility point for each fiscal year in which

contributions have been made to the fund.

(b.1) USERRA leave.--A member who is reemployed from USERRA

leave or who dies while performing USERRA leave shall receive

eligibility points in accordance with section 8306 for the

school service that would have been performed had the member not

performed USERRA leave.

member of the system other than a Class T-I member or a multiple

20150SB1071PN1410 - 37 -

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

service; or

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

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

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. Class T-I

members shall not be eligible to purchase previous noncreditable

school service.

(e) Limitations.--Notwithstanding any other provision of

this part, a Class T-I member shall be permitted to receive

vesting credit or eligibility points, as applicable, for:

20150SB1071PN1410 - 38 -

(1) USERRA leave; and

(2) an approved leave of absence, provided such approved

leaves of absence leaves are contributory leaves.

§ 8303.1. Waiver of adjustments.

(a) Allowance.--Upon appeal by an affected member,

participant, beneficiary or survivor annuitant, the board may

waive an adjustment or any portion of an adjustment made under

section 8534(b) (relating to fraud and adjustment of errors) if

in the opinion of the board or the board's designated

representative:

(1) the adjustment or portion of the adjustment will

cause undue hardship to the member, participant, beneficiary

or survivor annuitant;

(2) the adjustment was not the result of erroneous

information supplied by the member, participant, beneficiary

or survivor annuitant;

(3) the member or participant had no knowledge or notice

of the error before adjustment was made, and the member,

participant, beneficiary or survivor annuitant took action

with respect to their benefits based on erroneous information

provided by the system or plan; and

(4) the member, participant, beneficiary or survivor

annuitant had no reasonable grounds to believe the erroneous

information was incorrect before the adjustment was made.

(b) Time period.--

(1) In order to obtain consideration of a waiver under

this section, the affected member, participant, beneficiary

or survivor annuitant must appeal to the board in writing

within 30 days after receipt of notice that benefits have

been adjusted or, if no notice was given, within 30 days

20150SB1071PN1410 - 39 -

after the adjustment was known or should have been known to

the affected member, participant, beneficiary or survivor

annuitant.

(2) For any adjustments made prior to the effective date

of this subsection for which the member, participant,

beneficiary or survivor annuitant appealed to the board and

was denied, an appeal under this section must be filed within

90 days of the effective date of this subsection.

Section 2. Section 8304(a) of Title 24 is amended to read:

§ 8304. Creditable nonschool service.

(a) Eligibility.--An active member, other than a Class T-I

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.

20150SB1071PN1410 - 40 -

* * *

Section 205. Section 8305(b) of Title 24 is amended and the

section is amended by adding a subsection to read:

§ 8305. Classes of service.

* * *

(b) Other class membership.--A school employee who is a

member of a class of service other than Class T-C on the

effective date of this part may elect to become a member of

Class T-C or Class T-D or may retain his membership in such

other class until the service is discontinued or he elects to

become a full coverage member or elects to purchase credit for

previous school or creditable nonschool service. Any service

[thereafter] as a member of the system shall be credited as

Class T-C [or T-D], Class T-D or Class T-I service as

applicable.

* * *

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

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

active member and active participant, or a person who first

becomes a multiple service member or participant who is a State

employee and a member of the State Employees' Retirement System,

on or after July 1, 2016, shall be classified as a Class T-I

member upon payment of regular member contributions and

participant contributions, as applicable.

Section 206. Section 8305.1(c) of Title 24 is amended to

read:

§ 8305.1. Election to become a Class T-D member.

* * *

member shall remain in effect until the termination of

20150SB1071PN1410 - 41 -

employment except as otherwise provided in this part. Those

members who, on the effective date of this section, contribute

at the rate of 5 1/4% shall be deemed to have accepted the basic

contribution rate of 6 1/2% for all Class T-D service performed

on or after January 1, 2002. Those members who, on the effective

date of this section, contribute at the rate of 6 1/4% shall be

deemed to have accepted the basic contribution rate of 7 1/2%

for all Class T-D service performed on or after January 1, 2002.

Upon termination and a subsequent reemployment that occurs

before July 1, 2016, the class of service of the school employee

shall be credited in the class of service otherwise provided for

in this part. If the reemployment occurs on or after July 1,

2016, the school employee's eligibility for membership in the

system or participation in the plan shall be as provided in this

part.

* * *

Section 207. (Reserved).

Section 208. Section 8306 of Title 24 is amended to read:

§ 8306. Eligibility points.

(a) General rule.--An active member of the system other than

a Class T-I member shall accrue one eligibility point for each

year of credited service as a member of the school or State

retirement system. A member shall accrue an additional two-

thirds of an eligibility point for each year of Class D-3

credited service under the State Employees' Retirement System.

In the case of a fractional part of a year of credited service,

a member shall accrue the corresponding fractional portion of an

eligibility point. Class T-I members shall be deemed to accrue

one eligibility point for each fiscal year in which

contributions have been made to the fund.

20150SB1071PN1410 - 42 -

(a.1) USERRA leave.--A member or participant who is

reemployed from USERRA leave or who dies while performing USERRA

leave shall be granted the eligibility points that he would have

accrued had he continued in his school office or employment

instead of performing USERRA leave. If a school employee who is

reemployed from USERRA leave makes the member or mandatory

pickup participant contributions to be granted school service

credit for the USERRA leave, no additional eligibility points

may be granted.

(b) Transitional rule.--For the purposes of the transition:

(1) In determining whether a member, other than a

disability annuitant who returns to school service after June

30, 2001, upon termination of the disability annuity, who is

not a school employee or a State employee on June 30, 2001,

and July 1, 2001, and who has previous school service, has

the five eligibility points required by the definition of

"vestee" in sections 8102 (relating to definitions), 8307

(relating to eligibility for annuities), 8308 (relating to

eligibility for vesting) and 8345 (relating to member's

options), only eligibility points earned by performing

credited school service as an active member of the system,

USERRA leave or credited State service as an active member of

the State Employee's Retirement System after June 30, 2001,

shall be counted until such member earns one eligibility

point by performing credited school service or credited State

service after June 30, 2001, at which time all eligibility

points as determined under subsection (a) shall be counted.

(2) A member subject to paragraph (1) shall be

considered to have satisfied any requirement for five

eligibility points contained in this part if the member has

20150SB1071PN1410 - 43 -

at least ten eligibility points determined under subsection

(a).

Section 209. Section 8307 of Title 24 is amended and the

section is amended by adding subsections to read:

§ 8307. Eligibility for annuities.

(a) Superannuation annuity.--An active or an inactive

member, other than a Class T-I member, who attains

superannuation age shall be entitled to receive a superannuation

annuity upon termination of service and filing of a proper

application. A combined service employee who is an active or

inactive participant and attains superannuation age in the

system shall be entitled to receive a superannuation annuity

upon termination of service and filing of a proper application.

(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.

than a Class T-I member, who has credit for at least five years

of service shall, upon filing of a proper application, be

entitled to a disability annuity if he becomes mentally or

physically incapable of continuing to perform the duties for

which he is employed and qualifies for an annuity in accordance

with the provisions of section 8505(c)(1) (relating to duties of

20150SB1071PN1410 - 44 -

board regarding applications and elections of members).

(d) Class T-I members.--A Class T-I member who terminates

school service shall, upon filing of a proper application, be

entitled to receive an annuity.

(e) Multiple classes of service.--A member with more than

one class of service who vests his retirement benefits in any

class of service may not receive distributions from other

classes of service until his effective date of retirement,

regardless of whether his benefits resulting from such other

classes of service are vested or he is eligible to receive an

annuity. A member with service credited in more than one class

of service may not separately vest those benefits and receive

annuities from different classes of service with different

effective dates.

Section 210. Sections 8308, 8310, 8321, 8322.1(a), 8323(a)

and (d), 8324(b), (c) and (d), 8325, 8325.1 and 8326(a) and (c)

of Title 24 are amended to read:

§ 8308. Eligibility for vesting.

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

terminates school service, or if a multiple service member and

an active member of the State Employees Retirement System,

terminates State 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, or if a multiple service

member and an active member of the State Employees Retirement

System, terminates State service, with ten or more eligibility

points shall be entitled to vest his retirement benefits until

attainment of superannuation age. A Class T-I member who

terminates school service shall be entitled to vest his

20150SB1071PN1410 - 45 -

retirement benefits until the member ' s required beginning date,

provided the balance of his members ' savings account and cash

balance account exceeds the requirements of a de minimis account

under section 8349(d) (relating to payment of benefits).

(b) Multiple classes of service.--A member with more than

one class of service who vests his retirement benefits in any

class of service may not receive distributions from other

classes of service until his effective date of retirement,

regardless of whether his benefits resulting from such other

classes of service are vested or he is eligible to receive an

annuity. A member with service credited in more than one class

of service may not separately vest those benefits and receive

annuities from different classes of service with different

effective dates.

§ 8310. Eligibility for refunds.

Upon termination of service any active member, regardless of

eligibility for benefits, may elect to receive his accumulated

deductions in lieu of any benefit from the system to which he is

entitled.

§ 8321. Regular member contributions and cash balance member

contributions for current service.

(a) General.--Regular member contributions and cash balance

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 limiting

such contributions, or relating to the limitations under IRC §

401(a)(17) or 415(b).

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

(1) Commencing with the annual actuarial valuation

20150SB1071PN1410 - 46 -

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-D, 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-D, T-E and T-F

members will decrease by .5%[.], provided the total member

contribution rate on the date of the actuarial valuation is

above the member ' s total contribution rate in effect on the

effective date of this paragraph. If the actual investment

rate of return, net of fees, is more than the annual interest

rate adopted by the board by an amount of 1% or more, the

shared risk contribution rate of Class T-D, T-E and T-F

members will decrease by .5%. If the actual investment rate

of return, net of fees, is equal to or below the annual

interest rate adopted by the board, the shared risk

contribution rate of Class T-D, T-E and T-F members will

increase by .5%, provided the total member contribution rate

on the date of the actuarial valuation is below the member ' s

total contribution rate in effect on the effective date of

this paragraph. Class T-D, T-E and T-F members will

contribute at the total member contribution rate in effect

20150SB1071PN1410 - 47 -

when they are hired. [The]

(2) Notwithstanding paragraph (1), the total member

contribution rate for Class T-D and T-E members who are

currently paying 7.5% on the effective date of this paragraph

shall not be less than [7.5%] 5.5%, nor more than 9.5%. The

total member contribution rate for Class T-F members shall

not be less than [10.3%] 8.3%, nor more than 12.3%. The total

member contribution rate for Class T-D members who are

currently paying 6.5% on the effective date of this paragraph

shall not be less than 4.5%, nor more than 8.5%.

(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, and the

total contribution rate of the member is above the basic

contribution rate, the shared-risk contribution rate shall be

zero.

(4) 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)] (5) 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)] (6) 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),

20150SB1071PN1410 - 48 -

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

members shall be prospectively reset to the basic

contribution rate.

[(3)] (7) 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.

§ 8322.1. Pickup contributions.

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

contributions required to be made to the fund under sections

8321 (relating to regular member contributions for current

service) and 8322 (relating to joint coverage member

contributions), with respect to current school service rendered

by an active member on or after January 1, 1983, shall be picked

up by the employer and shall be treated as the employer's

contribution for purposes of IRC § 414(h).

* * *

§ 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 in the system for

reinstatement of all previously credited school service, school

service not previously credited, sabbatical leave as if he had

been in full-time daily attendance, or full-coverage membership

shall be sufficient to provide an amount equal to the

accumulated deductions which would have been standing to the

credit of the member for such service had regular member

contributions been made with full coverage at the rate of

contribution necessary to be credited as Class T-C service,

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

20150SB1071PN1410 - 49 -

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 service as an active member or inactive member

and State service as an active member or inactive member on

leave without pay up to the date of purchase.

* * *

(d) Certification and payment of contributions.--

(1) In all cases other than for the purchase of credit

for sabbatical leave and activated military service leave

beginning before the effective date of paragraph (2), the

amount payable shall be certified by the board in accordance

with methods approved by the actuary and may be paid 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 to the system 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.

20150SB1071PN1410 - 50 -

(2) In the case of activated military service leave

beginning before the effective date of this paragraph, the

amount payable may be paid according to this subsection or

subsection (c.1), but all lump sum payments must be made

within one year of the termination of activated military

service leave.

§ 8324. Contributions for purchase of credit for creditable

nonschool service and noncreditable school service.

* * *

(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

service as an active member or inactive member and State service

as an active member or inactive member on leave without pay 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 to

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

The salary deduction amortization plans agreed to by members and

20150SB1071PN1410 - 51 -

the board may include a deferral of payment amounts and

statutory interest until the termination of school service or

State service or becoming a participant and a combined service

employee 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.

of credit for intervening military service shall be determined

by the member's basic contribution rate and compensation at the

time of entry of the member into active military service,

together with statutory interest during all periods of

subsequent school service as an active member or inactive member

and State service as an active member or inactive member on

leave without pay to date of purchase. Upon application for such

credit the amount due shall be certified in the case of each

member by the board, in accordance with methods approved by the

actuary, and contributions may be made by one of the following

methods:

20150SB1071PN1410 - 52 -

(1) Regular monthly payments during active military

service.

(2) A lump sum payment within 90 days of certification

of the amount due.

(3) Salary deductions to the system 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 or

becoming a participant and a combined service employee 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.

(d) Other creditable nonschool service and noncreditable

school service.--

(1) Contributions on account of Class T-C 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

20150SB1071PN1410 - 53 -

with statutory interest during all periods of subsequent

school service as an active member or inactive member or

State service as an active member or inactive member on leave

without pay 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 to the system 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 or

becoming a participant and a combined service employee 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

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

20150SB1071PN1410 - 54 -

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

to the system 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 or becoming a participant and

combined service employee 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

to the system in amounts agreed upon by the member and the

20150SB1071PN1410 - 55 -