23.0280.03000
Sixty-eighth
Legislative Assembly HOUSE BILL NO. 1040
of North Dakota
Introduced by
Legislative Management
(Retirement Committee)
1 A BILL for an Act to create and enact sections 54-52-02.15, 54-52.2-09, 54-52.6-02.1,
2 54-52.6-05.1, 54-52.6-09.5, 54-52.6-09.6, and 54-52.6-22 of the North Dakota Century Code,
3 relating to the closure of the public employees retirement system main plan, the deferred
4 compensation program, and expansion of the defined contribution retirement plan; to amend
5 and reenact section 6-09.4-10.1, paragraph 1 of subdivision a of subsection 1 of section
6 15-39.1-10.3, sections 21-10-13, 54-52-01, 54-52-02.5, 54-52-02.9, 54-52-02.11, and
7 54-52-02.12, subsection 2 of section 54-52-05, sections 54-52-06 and 54-52-14.3, subdivision b
8 of subsection 1 of section 54-52-17.2, and sections 54-52.6-01, 54-52.6-02, 54-52.6-03,
9 54-52.6-05, 54-52.6-08, 54-52.6-09, 54-52.6-10, 54-52.6-13, 54-52.6-15, and 54-52.6-19 of the
10 North Dakota Century Code, relating to a transfer from the legacy earnings fund to the public
11 employees retirement system main plan and the public employees retirement system defined
12 benefit and defined contribution retirement plans; to repeal section 54-52-06.5 of the North
13 Dakota Century Code, relating to public employees retirement system retirement plan
14 contribution rates upon reaching full funding; to provide an appropriation; to provide for a
15 transfer; to provide for application; and to provide an effective date.
16 BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
17 SECTION 1. AMENDMENT. Section 6-09.4-10.1 of the North Dakota Century Code is
18 amended and reenacted as follows:
19 6-09.4-10.1. Legacy sinking and interest fund - Debt service requirements - Public
20 finance authority.
21 There is created in the state treasury the legacy sinking and interest fund. The fund consists
22 of all moneys deposited in the fund under section 21-10-13. Moneys in the fund may be spent
23 by the public finance authority pursuant to legislative appropriations to meet the debt service
24 requirements for evidences of indebtedness issued by the authority for transfer to the Bank of
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1 North Dakota for allocations to infrastructure projects and programs. Any moneys in the fund in
2 excess of the amounts appropriated from the fund to meet the debt service requirements for a
3 biennium must be transferred by the state treasurer to the public employees retirement system
4 main system plan under chapter 54-52, but only if the public employees retirement system main
5 system plan's actuarial funded ratio as reported for the most recently completed even-
6 numbered fiscal year is less than ninety percent. If the public employees retirement system
7 main system plan's actuarial funded ratio is ninety percent or more and then subsequently
8 decreases below ninety percent, the state treasurer may not resume the transfers under this
9 subdivision unless the main system plan's actuarial funded ratio is less than seventy percent.
10 SECTION 2. AMENDMENT. Paragraph 1 of subdivision a of subsection 1 of section
11 15-39.1-10.3 of the North Dakota Century Code is amended and reenacted as follows:
12 (1) The public employees retirement system, except an "eligible employee" as
13 that term is defined under section 54-52-02.15.
14 SECTION 3. AMENDMENT. Section 21-10-13 of the North Dakota Century Code is
15 amended and reenacted as follows:
16 21-10-13. Legacy earnings fund - State treasurer - Transfers.
17 1. There is created in the state treasury the legacy earnings fund. The fund consists of all
18 moneys transferred to the fund under subsection 2 and all interest and earnings upon
19 moneys in the fund.
20 2. Any legacy fund earnings transferred to the general fund at the end of each biennium
21 in accordance with section 26 of article X of the Constitution of North Dakota must be
22 immediately transferred by the state treasurer to the legacy earnings fund.
23 3. For each biennium subsequent to the biennium in which the legacy fund earnings are
24 transferred under subsection 2, the amount available for appropriation from the legacy
25 earnings fund is seven percent of the five-year average value of the legacy fund
26 assets as reported by the state investment board. The average value of the legacy
27 fund assets must be calculated using the value of the assets at the end of each fiscal
28 year for the five-year period ending with the most recently completed even-numbered
29 fiscal year.
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1 4. On July first of each odd-numbered year, from the amount available for appropriation
2 or transfer from the legacy earnings fund for the biennium, the state treasurer shall
3 transfer funding in the following order:
4 a. The lesser of the first one hundred fifty million dollars or an amount equal to any
5 legislative appropriations to meet the debt service requirements for a biennium
6 for evidences of indebtedness issued by the public finance authority for transfer
7 to the Bank of North Dakota for allocations to infrastructure projects and
8 programs to the legacy sinking and interest fund under section 6-09.4-10.1.
9 b. The next seventy million dollars to the public employees retirement system for
10 administrative expenses for chapters 54-52 and 54-52.6 and for the unfunded
11 liability of the main system plan under chapter 54-52, but only if the public
12 employees retirement system main system plan's actuarial funded ratio as
13 reported for the most recently completed even-numbered fiscal year is less than
14 ninety percent. If the public employees retirement system main system plan's
15 actuarial funded ratio is ninety percent or more and subsequently decreases
16 below ninety percent, the state treasurer may not resume the transfers under this
17 subdivision unless the main system plan's actuarial funded ratio is less than
18 seventy percent as reported for the most recently completed even-numbered
19 fiscal year.
20 c. The next sixty million dollars to the highway tax distribution fund for allocations
21 under section 54-27-19.
22 c.d. Any remaining funds for other purposes as designated by the legislative
23 assembly, including:
24 (1) Up to fifty million dollars for tax relief pursuant to appropriations or transfers
25 authorized by the legislative assembly;
26 (2) Up to thirty million dollars to the clean sustainable energy fund pursuant to
27 appropriations or transfers authorized by the legislative assembly; and
28 (3) Up to thirty million dollars for university research programs, the innovation
29 loan fund to support technology advancement, and workforce enrichment
30 initiatives pursuant to appropriations or transfers authorized by the
31 legislative assembly.
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1 5. If the amounts transferred under subsection 2 exceed the amount available for
2 appropriation under subsection 3, an amount equal to any appropriations from the
3 legacy sinking and interest fund for bond payments under section 6-09.4-10.1 must be
4 retained in the legacy earnings fund through June 30, 2025, after which an amount
5 equal to twice any appropriations from the legacy sinking and interest fund under
6 section 6-09.4-10.1 for bond payments, but not more than one hundred fifty million
7 dollars, must be retained in the legacy earnings fund. After deducting any amounts to
8 be retained in the legacy earnings fund, the state treasurer shall transfer, within thirty
9 days, any remaining amounts under this subsection in the following order:
10 a. The first one hundred million dollars to the legacy fund to become part of the
11 principal.
12 b. Any remaining amount to the strategic investment and improvements fund to be
13 used in accordance with the provisions of section 15-08.1-08.
14 SECTION 4. AMENDMENT. Section 54-52-01 of the North Dakota Century Code is
15 amended and reenacted as follows:
16 54-52-01. Definition of terms.
17 As used in this chapter, unless the context otherwise requires:
18 1. "Account balance" means the total contributions made by the employee, vested
19 employer contributions under section 54-52-11.1, the vested portion of the vesting
20 fund as of June 30, 1977, and interest credited thereon at the rate established by the
21 board.
22 2. "Beneficiary" means any person in receipt of a benefit provided by this plan or any
23 person designated by a participating member to receive benefits.
24 3. "Correctional officer" means a participating member who is employed as a correctional
25 officer by a political subdivision.
26 4. "Deferred member" means a participating member who is not actively participating in
27 the main plan under this chapter and who has an account intact in the main plan under
28 this chapter.
29 5. "Eligible employee", except as otherwise provided under section 54-52-02.15, means
30 alla permanent employeesemployee who meetmeets all of the eligibility requirements
31 set by this chapter and who areis eighteen years or more of age, and. The term
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1 includes appointive and elective officials under sections 54-52-02.5, 54-52-02.11, and
2 54-52-02.12, and nonteaching employees of the superintendent of public instruction,
3 including the superintendent of public instruction, who elect to transfer from the
4 teachers' fund for retirement to the public employees retirement system under section
5 54-52-02.13, and employees of the state board for career and technical education who
6 elect to transfer from the teachers' fund for retirement to the public employees
7 retirement system under section 54-52-02.14. Eligible employeeThe term does not
8 include nonclassified state employees who electelected under section 54-52.6-02 to
9 become members of the retirement plan established under chapter 54-52.6 but. The
10 term does include employees of the judicial branch and employees of the board of
11 higher education and state institutions under the jurisdiction of the board of higher
12 education.
13 5.6. "Employee" means any individual employed by a governmental unit, whose
14 compensation is paid out of the governmental unit's funds, or funds controlled or
15 administered by a governmental unit, or paid by the federal government through any of
16 its executive or administrative officials; licensed employees of a school district means
17 those employees eligible to participate in the teachers' fund for retirement who, except
18 under subsection 2 of section 54-52-17.2, are not eligible employees under this
19 chapter.
20 6.7. "Employer" means a governmental unit.
21 7.8. "Firefighter" means a participating member who is employed as a firefighter by a
22 political subdivision and, notwithstanding subsection 13, for an individual employed
23 after July 31, 2017, is employed at least thirty-two hours per week and at least twenty
24 weeks each year of employment. A firefighter who is a participating member of the law
25 enforcement retirement plan created by this chapter who begins employment after
26 July 31, 2017, is ineligible to participate concurrently in any other retirement plan
27 administered by the public employees retirement system. The term does not include a
28 firefighter employee of the North Dakota national guard.
29 8.9. "Funding agent" or "agents" means an investment firm, trust bank, or other financial
30 institution which the retirement board may select to hold and invest the employers' and
31 members' contributions.
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1 9.10. "Governmental unit" means the state of North Dakota, except the highway patrol for
2 members of the retirement plan created under chapter 39-03.1, or a participating
3 political subdivision thereofof the state.
4 10.11. "National guard security officer or firefighter" means a participating member who is:
5 a. A security police employee of the North Dakota national guard; or
6 b. A firefighter employee of the North Dakota national guard.
7 11.12. "Participating member" means an eligible employee who through payment into the
8 plan has established a claim against the plan.
9 12.13. "Peace officer" means a participating member who is a peace officer as defined in
10 section 12-63-01 and is employed as a peace officer by the bureau of criminal
11 investigation or by a political subdivision and, notwithstanding subsection 13, for
12 persons employed after August 1, 2005, is employed thirty-two hours or more per
13 week and at least twenty weeks each year of employment. A peace officer who is a
14 participating member of the law enforcement retirement plan created by this chapter
15 who begins employment after August 1, 2005, is ineligible to participate concurrently in
16 any other retirement plan administered by the public employees retirement system.
17 13.14. "Permanent employee" means a governmental unitan employee whose services are
18 not limited in duration and who is filling an approved and regularly funded position in
19 an eligible governmental unit, and is employed twenty hours or more per week and at
20 least twenty weeks each year of employment.
21 14.15. "Prior service" means service or employment before July 1, 1966.
22 15.16. "Prior service credit" means such credit toward a retirement benefit as the retirement
23 board may determine under the provisions of this chapter.
24 16.17. "Public employees retirement system" means the retirement plan and program
25 established by this chapter.
26 17.18. "Retirement" means the acceptance of a retirement allowance under this chapter upon
27 either termination of employment or termination of participation in the retirement plan.
28 18.19. "Retirement board" or "board" means the governing authority created under section
29 54-52-03.
30 19.20. "Seasonal employee" means a participating member who does not work twelve
31 months a year.
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1 20.21. "Service" means employment on or after July 1, 1966.
2 21.22. "Service benefit" means the credit toward retirement benefits as determined by the
3 retirement board under the provisions of this chapter.
4 22.23. "Temporary employee" means a governmental unitan employee who is not eligible to
5 participate as a permanent employee, who is at least eighteen years old and not
6 actively contributing to another employer-sponsored pension fund, and, if employed by
7 a school district, occupies a noncertified teacher's position.
8 23.24. "Wages" and "salaries" means the member's earnings in eligible employment under
9 this chapter reported as salary on the member's federal income tax withholding
10 statements plus any salary reduction or salary deferral amounts under 26 U.S.C. 125,
11 401(k), 403(b), 414(h), or 457. "Salary" does not include fringe benefits such as
12 payments for unused sick leave, personal leave, vacation leave paid in a lump sum,
13 overtime, housing allowances, transportation expenses, early retirement incentive pay,
14 severance pay, medical insurance, workforce safety and insurance benefits, disability
15 insurance premiums or benefits, or salary received by a member in lieu of previously
16 employer-provided fringe benefits under an agreement between the member and
17 participating employer. Bonuses may be considered as salary under this section if
18 reported and annualized pursuant to rules adopted by the board.
19 SECTION 5. AMENDMENT. Section 54-52-02.5 of the North Dakota Century Code is
20 amended and reenacted as follows:
21 54-52-02.5. Newly elected and appointed state officials.
22 1. After December 31, 1999, a personbut before January 1, 2025, an individual elected
23 or appointed to a state office for the first time must, from and after the date that
24 personindividual qualifies and takes office, be a participating member of the public
25 employees retirement system unless that person makes an election at any time