Bill Summary – FastDemocracy

Enrolled Copy                                                                                S.B. 34
                    UTAH STATE RETIREMENT SYSTEMS REVISIONS
                                             2024 GENERAL SESSION
                                                   STATE OF UTAH
                                        Chief Sponsor: Wayne A. Harper House Sponsor: Cheryl K. Acton
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  LONG TITLE
  General Description:
      This bill modifies the Utah State Retirement and Insurance Benefit Act.
  Highlighted Provisions:
      This bill:
      ▸ modifies a defined term referencing the Utah State Retirement Investment Fund to
  reflect the fund name;
      ▸ requires a participating employer to maintain records supporting certifications and
  reports regarding employee service credit;
      ▸ provides a participating employer's liability for failing to comply with contribution,
  record keeping, reporting, and certification requirements;
      ▸ provides a participating employer's maximum penalty for failing to make contributions,
  retain records, or correctly report or certify eligibility;
      ▸ requires, in an appeal, that the Utah State Retirement Board review a hearing officer's
  final judgment or decision;
      ▸ clarifies that a career retirement benefit awarded to a surviving spouse is in addition to a
  death benefit; and
      ▸ makes technical and conforming changes.
  Money Appropriated in this Bill:
      None
  Other Special Clauses:
      None
  Utah Code Sections Affected:
  AMENDS:
      49-11-306, as last amended by Laws of Utah 2011, Chapter 352
     S.B. 34                                                                                   Enrolled Copy
       49-11-602, as last amended by Laws of Utah 2017, Chapter 141
       49-11-604, as last amended by Laws of Utah 2018, Chapter 10
       49-11-613, as last amended by Laws of Utah 2023, Chapter 37
       49-12-405, as last amended by Laws of Utah 2016, Chapter 84
       49-13-405, as last amended by Laws of Utah 2016, Chapter 84
       49-22-502, as last amended by Laws of Utah 2016, Chapter 84
       49-23-502, as last amended by Laws of Utah 2016, Chapter 84
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   Be it enacted by the Legislature of the state of Utah:
           Section 1. Section 49-11-306 is amended to read:
           49-11-306 . Definitions -- Scrutinized companies investment report -- Content --
   Reporting -- Exceptions.
   (1) As used in this section:
       (a) "Active business operations" means all business operations that are not inactive
             business operations.
       (b) (i) "Business operations" means investing, with actual knowledge on or after
             August 5, 1996, in Iran's petroleum sector which investment directly and
             significantly contributes to the enhancement of Iran's ability to develop the
             petroleum resources of Iran.
             (ii) "Business operations" does not include the retail sale of gasoline and related
                 consumer products.
       (c) "Company" means any foreign sole proprietorship, organization, association,
             corporation, partnership, joint venture, limited partnership, limited liability
             partnership, limited liability company, or any other foreign entity or business
             association, including all wholly-owned subsidiaries, majority-owned subsidiaries or
             parent companies or affiliates of these entities or business associations, that exists for
             the purpose of making a profit.
       (d) (i) "Direct holdings" means all publicly traded equity securities of a company that
             are held directly by the [public] investment fund or in an account or fund in which
             the [public] investment fund owns all shares or interests.
             (ii) "Direct holdings" does not include publicly traded equity securities of a company
                 held as part of a passive indexing investment strategy.
       (e) "Inactive business operations" means the continued holding or renewal of rights to
             property previously operated for the purpose of generating revenues but not presently
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     Enrolled Copy                                                                                    S.B. 34
          deployed for that purpose.
      (f) "Investment fund" means the Utah State Retirement Investment Fund created in
          Section 49-11-301.
      [(f)] (g) "Iran" means the Islamic Republic of Iran.
      [(g)] (h) "Petroleum resources" means petroleum or natural gas.
      [(h) "Public fund" means the Utah State Retirement Investment Fund created under
          Section 49-11-301.]
      (i) "Scrutinized business operations" means any active business operations that:
          (i) are subject to or liable for sanctions under Public Law 104-172, the Iran Sanctions
              Act of 1996, as amended; and
          (ii) involve the maintenance of:
              (A) the company's existing assets or investments in Iran; or
              (B) the deployment of new investments to Iran that meet or exceed the threshold
                   referred to in Public Law 104-172, the Iran Sanctions Act of 1996, as amended.
      (j) "Scrutinized company" means any company engaging in scrutinized business
          operations.
  (2) (a) (i) The Utah State Retirement Office shall identify [those] the scrutinized
      companies in which the [public] investment fund has direct holdings.
          (ii) In making the determination, the board shall review and rely on publicly
              available information regarding companies with business operations in Iran,
              including information provided by nonprofit organizations, research firms,
              international organizations, and government entities.
      (b) The office shall assemble a list of all identified scrutinized companies.
      (c) The office shall update the list, on an annual basis, with information provided and
          received from those entities listed in Subsection (2)(a).
  (3) The office shall prepare an annual report of [public] investment fund investments in
      scrutinized companies.
  (4) The report shall include amounts and other data and statistics designed to explain the
      past and current extent to which public fund investments in scrutinized companies:
      (a) are present; and
      (b) are being prevented under Subsection (6).
  (5) The report shall be provided to the governor, the board, the president of the Senate, the
      speaker of the House of Representatives, and to each member and staff of the
      Retirement and Independent Entities Committee created under Section 63E-1-201.
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      S.B. 34                                                                                   Enrolled Copy
   (6) [Beginning July 1, 2011, using] Using the most current list assembled under Subsection
       (2), the office shall prevent the investment of [public funds] investment fund's direct
       holdings in a scrutinized company:
       (a) for[ public] funds managed within the office, by not investing in direct holdings in a
             scrutinized company; and
       (b) for[ public] funds managed by contract by a professional investment manager:
             (i) for existing contracts, by requesting that no more direct holdings be acquired in a
                 scrutinized company; and
             (ii) for future contracts, by stipulating in the contract that no new direct holdings be
                 acquired in a scrutinized company.
   (7) The provisions of this section do not apply to:
       (a) money invested in a defined contribution plan as defined under Section 49-11-102; or
       (b) investments in a company that is primarily engaged in:
             (i) supplying goods or services intended to relieve human suffering in Iran; or
             (ii) promoting health, education, religious, welfare, or journalistic activities in Iran.
           Section 2. Section 49-11-602 is amended to read:
           49-11-602 . Participating employer to maintain records -- Time limit -- Penalties
   for failure to comply.
   (1) A participating employer shall:
       (a) maintain records necessary to calculate benefits under this title and other records
             necessary for proper administration of this title as required by the office; and
       (b) maintain records that indicate whether an employee is receiving:
             (i) a benefit under state or federal law that, under Subsection 49-12-102(1)(b)(vi) or
                 (vii), is excluded from the definition of benefits normally provided for purposes of
                 Chapter 12, Public Employees' Contributory Retirement Act, Chapter 13, Public
                 Employees' Noncontributory Retirement Act, or Chapter 22, New Public
                 Employees' Tier II Contributory Retirement Act; or
             (ii) a benefit under a benefit package generally offered to similarly situated
                 employees.
   (2) A participating employer shall maintain all records necessary to support the
       participating employer's reports and certifications required by Section 49-11-603.
   [(2)] (3) A participating employer shall maintain the records required under [Subsection (1)]
       Subsections (1) and (2) until the earliest of:
       (a) three years after the date of retirement of the employee from a system or plan;
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      Enrolled Copy                                                                                     S.B. 34
      (b) three years after the date of death of the employee; or
      (c) 65 years from the date of employment with the participating employer.
  [(3)] (4) A participating employer shall be liable to the office for:
      (a) any liabilities and expenses, including administrative expenses and the cost of
          increased benefits to members, resulting from the participating employer's failure to
          maintain records under this section; and
      (b) a penalty equal to 1% of the participating employer's last month's contributions.
  [(4)] (5) The executive director may waive all or any part of the interest, penalties, expenses,
      and fees if the executive director finds there were extenuating circumstances
      surrounding the participating employer's failure to comply with this section.
  [(5)] (6) The office may estimate the length of service, compensation, or age of any
      member, if that information is not contained in the records.
  [(6)] (7) (a) A participating employer shall enroll an employee, make reports, submit
      contributions, and provide other requested information electronically in a manner
      approved by the office.
      (b) A participating employer shall treat any information provided electronically or
          otherwise by the office as subject to the confidentiality provisions of this title.
        Section 3. Section 49-11-604 is amended to read:
        49-11-604 . Office audits of participating employers -- Penalties for failure to
  comply.
  (1) (a) The office may perform an on-site compliance audit of a participating employer
      to determine compliance with reporting, contribution, and certification requirements
      under this title.
      (b) The office or its independent auditor may perform an on-site compliance audit of a
          participating employer or request records to be provided by the participating
          employer, including records required to complete:
          (i) audited financial statements;
          (ii) schedules of employer allocations and pension reporting in accordance with
               Governmental Accounting Standards Board statements; and
          (iii) service organizational controls reports.
      (c) The office may request records to be provided by the participating employer at the
          time of the audit.
      (d) Audits shall be conducted at the sole discretion of the office after reasonable notice
          to the participating employer of at least five working days.
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      S.B. 34                                                                                 Enrolled Copy
       (e) The participating employer shall extract and provide records as requested by the
             office in an appropriate, organized, and usable format.
       (f) Failure of a participating employer to allow access, provide records, or comply in any
             way with an office audit shall result in the participating employer being liable to the
             office for:
             (i) any liabilities and expenses, including administrative expenses and travel
                 expenses, resulting from the participating employer's failure to comply with the
                 audit; and
             (ii) a penalty equal to 1% of the participating employer's last month's contributions.
   (2) If the audit reveals a participating employer's failure to make contributions as required
       under Section 49-11-601, a failure to maintain records as required under Section
       49-11-602, or a failure to correctly report or certify eligibility as required under Section
       49-11-603, the participating employer shall [reimburse] be liable to the office for [the
       cost of the audit.] :
       (a) any liability or expense, including an administrative expense or the cost of increased
             benefits to members, resulting from the participating employer's failure to fully
             comply with the participating employer's reporting, contribution, certification, or
             record keeping requirements under this title; and
       (b) a penalty, not to exceed 50% of the participating employer's total contributions for
             the time period of the error.
   (3) If the audit reveals that an incorrect benefit has been paid by the office to a member,
       participant, alternate payee, or beneficiary due to a participating employer's failure to
       comply with the requirements of Section 49-11-601, 49-11-602, or 49-11-603, in
       addition to the liabilities contained in Subsection (2), the participating employer shall be
       liable to the office for the following:
       (a) the actuarial cost of correcting the incorrect benefit; and
       (b) administrative expenses.
   (4) The executive director may waive all or any part of the interest, penalties, expenses, and
       fees if the executive director finds there were extenuating circumstances surrounding the
       participating employer's failure to comply with this section.
           Section 4. Section 49-11-613 is amended to read:
           49-11-613 . Appeals procedure -- Right of appeal to hearing officer -- Board
   reconsideration -- Judicial review -- Docketing abstract of final administrative
   order.
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      Enrolled Copy                                                                                     S.B. 34
  (1) (a) A member, retiree, participant, alternative payee, covered individual, employer,
      participating employer, and covered employer shall inform themselves of their
      benefits, rights, obligations, and employment rights under this title.
      (b) Subject to Subsection (8), any dispute regarding a benefit, right, obligation, or
          employment right under this title is subject to the procedures provided under this
          section.
      (c) (i) A person who disputes a benefit, right, obligation, or employment right under
          this title shall request a ruling by the executive director who may delegate the
          decision to the deputy director.
          (ii) A request for a ruling to the executive director under this section shall constitute
               the initiation of an action for purposes of the limitations periods described in
               Section 49-11-613.5.
      (d) A person who is dissatisfied by a ruling under Subsection (1)(c) with respect to any
          benefit, right, obligation, or employment right under this title may request a review of
          that claim by a hearing officer within the time period described in Section
          49-11-613.5.
      (e) (i) The executive director, on behalf of the board, may request that the hearing
          officer review a dispute regarding any benefit, right, obligation, or employment
          right under this title by filing a notice of board action and providing notice to all
          affected parties in accordance with rules adopted by the board.
          (ii) The filing of a notice of board action shall constitute the initiation of an action for
               purposes of the limitations periods described in Section 49-11-613.5.
  (2) The hearing officer shall:
      (a) be hired by the executive director after consultation with the board;
      (b) follow and enforce the procedures and requirements of:
          (i) this title;
          (ii) the rules adopted by the board in accordance with Subsection (10); and
          (iii) Title 63G, Chapter 4, Administrative Procedures Act, except as specifically
               modified under this title or the rules adopted by the board in accordance with
               Subsection (10);
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