Bill Summary – FastDemocracy

Enrolled Copy                                                                             S.B. 221
                 PUBLIC RETIREMENT WITHDRAWAL AMENDMENTS
                                       2023 GENERAL SESSION
                                            STATE OF UTAH
                               Chief Sponsor: Wayne A. Harper
                                 House Sponsor: Carl R. Albrecht
 6
 LONG TITLE
 General Description:
        This bill modifies provisions of the Utah State Retirement and Insurance Benefit Act by
 providing the circumstances for a participating entity's withdrawal.
 Highlighted Provisions:
        This bill:
        < modifies provisions relating to withdrawal from participation in a Utah retirement
 system, including:
            C    amending the definition of "withdrawing entity" to include a nonprofit
 organization;
            C    providing the procedures for a withdrawing entity to make an election to
 withdraw; and
            C    requiring the withdrawing entity to pay certain costs that arise out of the election
 to withdraw; and
        < makes technical and conforming changes.
 Money Appropriated in this Bill:
        None
 Other Special Clauses:
        None
 Utah Code Sections Affected:
 AMENDS:
        49-11-626, as enacted by Laws of Utah 2022, Chapter 205
        49-12-203, as last amended by Laws of Utah 2022, Chapter 205
       S.B. 221                                                                        Enrolled Copy
        49-13-203, as last amended by Laws of Utah 2022, Chapter 205
        49-22-203, as last amended by Laws of Utah 2022, Chapter 205
32
 Be it enacted by the Legislature of the state of Utah:
        Section 1. Section 49-11-626 is amended to read:
        49-11-626. Withdrawing entity -- Participation election date -- Withdrawal costs
 -- Rulemaking.
        (1) As used in this section, "withdrawing entity" means an entity that:
        (a) participates in a system or plan under this title before January 1, [2022] 2023; and
        (b) (i) is a public employees' association; [or]
        (ii) is an insurer that is subject to the disclosure requirements of Section 31A-4-113[.];
 or
        (iii) after beginning participation with a system or plan under this title, has modified
 the entity's federal tax status to a nonprofit organization that qualified under Section 501(c)(3)
 of the Internal Revenue Code.
        (2) Notwithstanding any other provision of this title, a withdrawing entity may provide
 for the participation of the withdrawing entity's employees with that system or plan as follows:
        (a) the withdrawing entity shall determine a date that is no later than July 1, [2024]
 2025, on which the withdrawing entity shall make an election and complete withdrawal under
 Subsection (3);
        (b) the withdrawing entity shall provide to the office notice of the withdrawing entity's
 intent to enter into an agreement described in Subsection (2)(c);
        (c) the withdrawing entity and the office may enter into an intent to withdraw
 agreement to document a good faith arrangement to complete a withdrawal under this section;
 and
        (d) subject to Subsection (6), the withdrawing entity shall pay to the office any
 reasonable actuarial and administrative costs determined by the office to have arisen out of an
 election made under this section.
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       Enrolled Copy                                                                           S.B. 221
         (3) The withdrawing entity may elect to:
         (a) (i) continue the withdrawing entity's participation for all current employees of the
 withdrawing entity, who are covered by a system or plan on the date set under Subsection
 (2)(a); and
         (ii) withdraw from participation in all systems and plans for all persons initially
 entering employment with the withdrawing entity, beginning on the date set under Subsection
 (2)(a); or
         (b) withdraw from participation in all systems or plans for all current and future
 employees of the withdrawing entity, beginning on the date set under Subsection (2)(a).
         (4) (a) An election made under Subsection (3):
         (i) shall be made on or before the date specified under Subsection (2)(a);
         (ii) shall be documented by a resolution adopted by the governing body of the
 withdrawing entity;
         (iii) remains in effect unless and until the withdrawing entity again becomes a
 participating employer with the office in accordance with Subsection (5); and
         (iv) applies to the withdrawing entity as the employer and to all employees of the
 withdrawing entity.
         (b) Notwithstanding an election made under Subsection (3), any eligibility for service
 credit earned by an employee under this title before the date specified under Subsection (2)(a)
 is not affected by this section.
         (c) Notwithstanding any other provision of this title, a withdrawing entity that makes
 an election under Subsection (3) may provide or participate in any type of public or private
 retirement for the withdrawing entity's employees after the withdrawal.
         (5) After the withdrawal and subject to the laws and rules governing participating
 employer admission, the withdrawing entity may elect, by resolution of the withdrawing
 entity's governing body, to resume participation with the office and apply for admission as a
 participating employer in a system or plan under this title.
         (6) Before a withdrawing entity may withdraw under this section, the withdrawing
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        S.B. 221                                                                      Enrolled Copy
 entity and the office shall enter into an agreement on:
        (a) the costs described under Subsection (2)(d); and
        (b) arrangements for the payment of the costs described under Subsection (2)(d).
        Section 2. Section 49-12-203 is amended to read:
        49-12-203. Exclusions from membership in system.
        (1) The following employees are not eligible for service credit in this system:
        (a) subject to the requirements of Subsection (2), an employee whose employment
 status is temporary in nature due to the nature or the type of work to be performed;
        (b) except as provided under Subsection (3)(a), an employee of an institution of higher
 education who participates in a retirement system with a public or private retirement system,
 organization, or company designated by the Utah Board of Higher Education, or the technical
 college board of trustees for an employee of each technical college, during any period in which
 required contributions based on compensation have been paid on behalf of the employee by the
 employer;
        (c) an employee serving as an exchange employee from outside the state for an
 employer who has not elected to make all of the employer's exchange employees eligible for
 service credit in this system;
        (d) an executive department head of the state, a member of the State Tax Commission,
 the Public Service Commission, and a member of a full-time or part-time board or commission
 who files a formal request for exemption;
        (e) an employee of the Department of Workforce Services who is covered under
 another retirement system allowed under Title 35A, Chapter 4, Employment Security Act;
        (f) an employee who is employed on or after July 1, 2009, with an employer that has
 elected, prior to July 1, 2009, to be excluded from participation in this system under Subsection
 49-12-202(2)(c);
        (g) an employee who is employed on or after July 1, 2014, with an employer that has
 elected, prior to July 1, 2014, to be excluded from participation in this system under Subsection
 49-12-202(2)(d);
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        Enrolled Copy                                                                             S.B. 221
        (h) an employee who is employed with a withdrawing entity that has elected under
 Section 49-11-623, prior to January 1, 2017, to exclude:
        (i) new employees from participation in this system under Subsection 49-11-623(3)(a);
 or
        (ii) all employees from participation in this system under Subsection 49-11-623(3)(b);
        (i) an employee described in Subsection (1)(i)(i) or (ii) who is employed with a
 withdrawing entity that has elected under Section 49-11-624, before January 1, 2018, to
 exclude:
        (i) new employees from participation in this system under Subsection 49-11-624(3)(a);
 or
        (ii) all employees from participation in this system under Subsection 49-11-624(3)(b);
        (j) an employee who is employed with a withdrawing entity that has elected under
 Section 49-11-625, before July 1, 2022, to exclude all employees from participation in this
 system; or
        (k) an employee who is employed with a withdrawing entity that[, before July 1, 2024,]
 elects under Section 49-11-626 to exclude:
        (i) new employees from participation in this system under Subsection 49-11-626(3)(a);
 or
        (ii) all employees from participation in this system under Subsection 49-11-626(3)(b).
        (2) If an employee whose status is temporary in nature due to the nature of type of
 work to be performed:
        (a) is employed for a term that exceeds six months and the employee otherwise
 qualifies for service credit in this system, the participating employer shall report and certify to
 the office that the employee is a regular full-time employee effective the beginning of the
 seventh month of employment; or
        (b) was previously terminated prior to being eligible for service credit in this system
 and is reemployed within three months of termination by the same participating employer, the
 participating employer shall report and certify that the member is a regular full-time employee
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        S.B. 221                                                                       Enrolled Copy
 when the total of the periods of employment equals six months and the employee otherwise
 qualifies for service credits in this system.
         (3) (a) Upon cessation of the participating employer contributions, an employee under
 Subsection (1)(b) is eligible for service credit in this system.
         (b) Notwithstanding the provisions of Subsection (1)(f), any eligibility for service
 credit earned by an employee under this chapter before July 1, 2009 is not affected under
 Subsection (1)(f).
         (c) Notwithstanding the provisions of Subsection (1)(g), any eligibility for service
 credit earned by an employee under this chapter before July 1, 2014, is not affected under
 Subsection (1)(g).
         (4) Upon filing a written request for exemption with the office, the following
 employees shall be exempt from coverage under this system:
         (a) a full-time student or the spouse of a full-time student and individuals employed in
 a trainee relationship;
         (b) an elected official;
         (c) an executive department head of the state, a member of the State Tax Commission,
 a member of the Public Service Commission, and a member of a full-time or part-time board or
 commission;
         (d) an employee of the Governor's Office of Planning and Budget;
         (e) an employee of the Governor's Office of Economic Opportunity;
         (f) an employee of the Commission on Criminal and Juvenile Justice;
         (g) an employee of the Governor's Office;
         (h) an employee of the Public Lands Policy Coordinating Office, created in Section
 63L-11-201;
         (i) an employee of the State Auditor's Office;
         (j) an employee of the State Treasurer's Office;
         (k) any other member who is permitted to make an election under Section 49-11-406;
         (l) a person appointed as a city manager or chief city administrator or another person
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        Enrolled Copy                                                                         S.B. 221
 employed by a municipality, county, or other political subdivision, who is an at-will employee;
        (m) an employee of an interlocal cooperative agency created under Title 11, Chapter
 13, Interlocal Cooperation Act, who is engaged in a specialized trade customarily provided
 through membership in a labor organization that provides retirement benefits to the
 organization's members; and
        (n) an employee serving as an exchange employee from outside the state for an
 employer who has elected to make all of the employer's exchange employees eligible for
 service credit in this system.
        (5) (a) Each participating employer shall prepare and maintain a list designating those
 positions eligible for exemption under Subsection (4).
        (b) An employee may not be exempted unless the employee is employed in an
 exempted position designated by the participating employer.
        (6) (a) In accordance with this section, Section 49-13-203, and Section 49-22-205, a
 municipality, county, or political subdivision may not exempt a total of more than 50 positions
 or a number equal to 10% of the eligible employees of the municipality, county, or political
 subdivision, whichever is less.
        (b) A municipality, county, or political subdivision may exempt at least one regular
 full-time employee.
        (7) Each participating employer shall:
        (a) maintain a list of employee exemptions; and
        (b) update the employee exemptions in the event of any change.
        (8) The office may make rules to implement this section.
        (9) An employee's exclusion, exemption, participation, or election described in this
 section:
        (a) shall be made in accordance with this section; and
        (b) is subject to requirements under federal law and rules made by the board.
        Section 3. Section 49-13-203 is amended to read:
        49-13-203. Exclusions from membership in system.
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        S.B. 221                                                                      Enrolled Copy
        (1) The following employees are not eligible for service credit in this system:
        (a) subject to the requirements of Subsection (2), an employee whose employment
 status is temporary in nature due to the nature or the type of work to be performed;
        (b) except as provided under Subsection (3)(a), an employee of an institution of higher
 education who participates in a retirement system with a public or private retirement system,
 organization, or company designated by the Utah Board of Higher Education, or the technical
 college board of trustees for an employee of each technical college, during any period in which
 required contributions based on compensation have been paid on behalf of the employee by the
 employer;
        (c) an employee serving as an exchange employee from outside the state for an
 employer who has not elected to make all of the employer's exchange employees eligible for
 service credit in this system;
        (d) an executive department head of the state or a legislative director, senior executive
 employed by the governor's office, a member of the State Tax Commission, a member of the
 Public Service Commission, and a member of a full-time or part-time board or commission
 who files a formal request for exemption;
        (e) an employee of the Department of Workforce Services who is covered under
 another retirement system allowed under Title 35A, Chapter 4, Employment Security Act;
        (f) an employee who is employed with an employer that has elected to be excluded
 from participation in this system under Subsection 49-13-202(5), effective on or after the date
 of the employer's election under Subsection 49-13-202(5);
        (g) an employee who is employed with a withdrawing entity that has elected under
 Section 49-11-623, prior to January 1, 2017, to exclude:
        (i) new employees from participation in this system under Subsection 49-11-623(3)(a);
 or
        (ii) all employees from participation in this system under Subsection 49-11-623(3)(b);
        (h) an employee described in Subsection (1)(h)(i) or (ii) who is employed with a
 withdrawing entity that has elected under Section 49-11-624, before January 1, 2018, to
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        Enrolled Copy                                                                             S.B. 221
 exclude:
         (i) new employees from participation in this system under Subsection 49-11-624(3)(a);
 or
         (ii) all employees from participation in this system under Subsection 49-11-624(3)(b);
         (i) an employee who is employed with a withdrawing entity that has elected under
 Section 49-11-625, before July 1, 2022, to exclude all employees from participation in this
 system; or
         (j) an employee who is employed with a withdrawing entity that[, before July 1, 2024,]
 elects under Section 49-11-626 to exclude:
         (i) new employees from participation in this system under Subsection 49-11-626(3)(a);
 or
         (ii) all employees from participatio