Bill Summary – FastDemocracy

HOUSE BILL NO. 4665
     May 25, 2023, Introduced by Reps. Snyder, O'Neal, Liberati, McFall, McKinney, Price, Tyrone
       Carter and Paiz and referred to the Committee on Labor.
          A bill to amend 1986 PA 182, entitled
    "State police retirement act of 1986,"
    by amending sections 3 and 4 (MCL 38.1603 and 38.1604), as amended
    by 2018 PA 674.
                     THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
       Sec. 3. (1) "Banked leave time program" means the part B
 annual leave hours within the state's annual and sick leave program
 approved by a ruling of the Internal Revenue Service on September
 5, 2003, in which a pay reduction or other concessions are applied
 to a member in exchange for additional part B annual leave hours.
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       (2) "Credited service" means the sum of the prior service and
 membership service credited to a member's account.
       (3) "Deferred member" means a member who separates from
 service with entitlement to a deferred retirement allowance as
 provided in section 30, but who is not a retirant.
       (4) "Department" means the department of technology,
 management, and budget.
       (5) "Direct rollover" means a payment by the retirement system
 to the eligible retirement plan specified by the distributee.
       (6) "Distributee" includes a member or deferred member.
 Distributee also includes the member's or deferred member's
 surviving spouse or the member's or deferred member's spouse or
 former spouse under an eligible domestic relations order, with
 regard to the interest of the spouse or former spouse.
       (7) "DROP participant" means an officer who participates in
 the deferred retirement option plan established in section 24a.
       (8) Beginning January 1, 2002, except as otherwise provided in
 this subsection, "eligible retirement plan" means 1 or more of the
 following:
       (a) An individual retirement account described in section
 408(a) of the internal revenue code, 26 USC 408.
       (b) An individual retirement annuity described in section
 408(b) of the internal revenue code, 26 USC 408.
       (c) An annuity plan described in section 403(a) of the
 internal revenue code, 26 USC 403.
       (d) A qualified trust described in section 401(a) of the
 internal revenue code, 26 USC 401.
       (e) An annuity contract described in section 403(b) of the
 internal revenue code, 26 USC 403.
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       (f) An eligible plan under section 457(b) of the internal
 revenue code, 26 USC 457, that is maintained by a state, political
 subdivision of a state, or an agency or instrumentality of a state
 or political subdivision of a state and that agrees to separately
 account for amounts transferred into the eligible plan under
 section 457(b) of the internal revenue code, 26 USC 457, from this
 retirement system, that accepts the distributee's eligible rollover
 distribution.
       (g) Beginning January 1, 2008, a Roth individual retirement
 account as described in section 408A of the internal revenue code,
 26 USC 408A, subject to the rules that apply to rollovers from a
 traditional individual retirement account to a Roth individual
 retirement account.
       (9) Beginning January 1, 2007, "eligible rollover
 distribution" means a distribution of all or any portion of the
 balance to the credit of the distributee. Eligible rollover
 distribution does not include any of the following:
       (a) A distribution made for the life or life expectancy of the
 distributee or the joint lives or joint life expectancies of the
 distributee and the distributee's designated beneficiary.
       (b) A distribution for a specified period of 10 years or more.
       (c) A distribution to the extent that the distribution is
 required under section 401(a)(9) of the internal revenue code, 26
 USC 401.
       (d) The portion of any distribution that is not includable in
 federal gross income, except to the extent the portion of the
 distribution is paid to either of the following:
       (i) An individual retirement account or annuity described in
 section 408(a) or 408(b) of the internal revenue code, 26 USC 408.
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       (ii) A qualified plan described in section 401(a) of the
 internal revenue code, 26 USC 401, or an annuity contract described
 in section 403(b) of the internal revenue code, 26 USC 403, and the
 plan providers agree to separately account for the amounts paid,
 including any portion of the distribution that is includable in
 federal gross income, and the portion of the distribution that is
 not so includable.
       (10) "Final average compensation" means, except as otherwise
 provided in this subsection, the average annual salary for the last
 2 years of service with the department of state police, department
 of corrections, department of health and human services, department
 of natural resources, or department of environment, Great Lakes,
 and energy, as applicable, for which the member was compensated as
 defined in subsection (13). Except as otherwise provided in this
 subsection, for a nonclassified member of the department holding
 the rank of colonel, final average compensation means the same
 average annual salary as that computed for the highest salaried
 classified member of the department, or at the average annual
 salary for the last 2 years of service with the department of state
 police for which the member was compensated, whichever is greater.
 Beginning with the effective date of the amendatory act that added
 section 42a, December 28, 2018, for a member who first became a
 member on or after June 10, 2012, final average compensation means
 the average salary for the last 5 years of service for which the
 member was compensated as defined in subsection (14). Average
 annual salary includes only the following compensation items:
       (a) Beginning with the effective date of the amendatory act
 that added section 42a, December 28, 2018, for a member who first
 became a member before June 10, 2012, only the following
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 compensation items:
       (i) Regular salary paid for the last 2 years of service,
 including, but not limited to, that salary that is deferred
 pursuant to a state deferred compensation program.
       (ii) Overtime, shift differential, and shift differential
 overtime paid for the last 2 years of service.
       (iii) Gross pay adjustments paid affecting the last 2 years of
 service, including compensatory time and emergency response
 compensation.
       (iv) Up to a maximum of 240 hours of accumulated annual leave,
 paid at the time of retirement separation excluding part B annual
 leave hours paid at the time of retirement separation.
       (v) Deferred hours under Plan B of the fiscal years ending
 September 30, 1981, and September 30, 1982, that are paid at the
 time of retirement separation.
       (vi) Longevity pay equal to 2 full years.
       (vii) Bomb squad pay paid for the last 2 years of service.
       (viii) Post 29 freeway premium paid for the last 2 years of
 service.
       (ix) On-call pay paid for the last 2 years of service.
       (x) Beginning October 1, 2003, the value of any unpaid
 furlough hours or the value of any unpaid hours exchanged for part
 B annual leave hours, calculated at the member's then-current
 hourly rate or rates of pay, for a period during which a member is
 participating in the banked leave time program.
       (xi) Beginning May 1, 2009, the value of temporary layoff
 hours. As used in this subparagraph, "temporary layoff hours" means
 hours attributable to the layoff of a member if the layoff does not
 exceed 1 month and has a fixed, predetermined, and announced recall
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 date.
         (b) Beginning with the effective date of the amendatory act
 that added section 42a, December 28, 2018, for a member who first
 became a member on or after June 10, 2012, only the following
 compensation items:
         (i) Regular salary paid for the last 5 years of service,
 including, but not limited to, that salary that is deferred
 pursuant to a state deferred compensation program.
         (ii) Shift differential.
         (iii) Gross pay adjustments paid affecting the last 5 years of
 service, including compensatory time and emergency response
 compensation.
         (iv) Up to a maximum of 240 hours of accumulated annual leave,
 paid at the time of retirement separation excluding part B annual
 leave hours paid at the time of retirement separation.
         (v) Longevity pay equal to 5 full years.
         (vi) Bomb squad pay paid for the last 5 years of service.
         (vii) Post 29 freeway premium paid for the last 5 years of
 service.
         (viii) On-call pay paid for the last 5 years of service.
         (ix) The value of any unpaid furlough hours or the value of any
 unpaid hours exchanged for part B annual leave hours, calculated at
 the member's then-current hourly rate or rates of pay, for a period
 during which a member is participating in the banked leave time
 program.
         (x) The value of temporary layoff hours. As used in this
 subparagraph, "temporary layoff hours" means hours attributable to
 the layoff of a member if the layoff does not exceed 1 month and
 has a fixed, predetermined, and announced recall date.
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       (11) "Furlough hours" means unworked hours incurred in
 conjunction with the banked leave time program.
       (12) "Internal revenue code" means the United States internal
 revenue code of 1986.
       (13) "Last 2 years of service" means the 2-year period
 immediately preceding the member's last day of service or that
 period of 2 consecutive years of service with the department of
 state police, department of corrections, department of health and
 human services, department of natural resources, or department of
 environment, Great Lakes, and energy, as applicable, immediately
 preceding the date the duty disability occurred according to the
 medical examinations conducted under section 29 or, if the officer
 participated in the deferred retirement option plan, the 2-year
 period immediately preceding participation in the deferred
 retirement option plan.
       (14) "Last 5 years of service" means the 5-year period
 immediately preceding the member's last day of service or that
 period of 5 consecutive years of service with the department of
 state police, department of corrections, department of health and
 human services, department of natural resources, or department of
 environment, Great Lakes, and energy, as applicable, immediately
 preceding the date the duty disability occurred according to the
 medical examinations conducted under section 29.
       Sec. 4. (1) "Member", except where the context otherwise
 requires, means an any of the following:
       (a) An employee of the department of state police who has
 subscribed to the constitutional oath of office.
       (b) An individual employed in an eligible position who elected
 to terminate his or her participation in the state employees'
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 retirement system under section 50b of the state employees
 retirement act, 1943 PA 240, MCL 38.50b. An individual described in
 this subdivision is treated as an individual who first becomes a
 member after June 9, 2012. As used in this subdivision, "eligible
 position" means that term as defined in section 50b of the state
 employees' retirement act, 1943 PA 240, MCL 38.50b.
       (c) An individual employed in an eligible position who is
 first employed and entered on the payroll on or after October 1,
 2024. An individual described in this subdivision is treated as an
 individual who first becomes a member after June 9, 2012. As used
 in this subdivision, "eligible position" means that term as defined
 in section 50b of the state employees' retirement act, 1943 PA 240,
 MCL 38.50b.
       (d) A conservation officer who elected to terminate his or her
 position in the state employees' retirement system under section
 50c of the state employees' retirement act, 1943 PA 240, MCL
 38.50c. An individual described in this subdivision is treated as
 an individual who first becomes a member on or after June 10, 2012.
 As used in this subdivision, "conservation officer" means that term
 as defined in section 1b of the state employees' retirement act,
 1943 PA 240, MCL 38.1b.
       (e) A conservation officer who is first employed and entered
 on the payroll after September 30, 2024. An individual described in
 this subdivision is treated as an individual who first becomes a
 member on or after June 10, 2012. As used in this subdivision,
 "conservation officer" means that term as defined in section 1b of
 the state employees' retirement act, 1943 PA 240, MCL 38.1b.
       (f) A state police motor carrier or Michigan state police
 properties securities officer who elected to terminate his or her
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 position in the state employees' retirement system under section
 50d of the state employees' retirement act, 1943 PA 240, MCL
 38.50d. An individual described in this subdivision is treated as
 an individual who first becomes a member after June 9, 2012.
       (g) A state police motor carrier or Michigan state police
 properties securities officer who is first employed and entered on
 the payroll after September 30, 2024. An individual described in
 this subdivision is treated as an individual who first becomes a
 member after June 9, 2012.
       (2) "Officer" means a nonexclusively represented member of the
 retirement system.
       (3) "Qualified participant" means an individual who first
 becomes a member on or after June 10, 9, 2012 and who is also a
 participant of Tier 2.
       (4) "Regular interest" means a rate or rates per annum,
 compounded annually, as the retirement board determines. For the
 purposes of employee refunds, the interest rate payable must not
 exceed 4% per annum, compounded annually.
       (5) "Retirant" means a member who separates from service and
 retires with a retirement allowance payable from the appropriate
 reserve of the retirement system.
       (6) "Retirement allowance" means the annual amount, payable
 monthly, to which a retirant, retirement allowance beneficiary, or
 refund beneficiary is entitled under this act.
       (7) "Retirement allowance beneficiary" means a person who is
 being paid or has entitlement to the payment of a retirement
 allowance in the event of the death of a member, deferred member,
 or retirant.
       (8) "Retirement board" means the retirement board created in
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 section 6.
       (9) "Retirement system" means the system of benefits for
 members and qualified participants of the department of state
 police and their survivors and beneficiaries provided by this act.
       (10) "Surviving spouse" means the spouse at the time of death
 of the member or retirant.
       (11) "Tier 1" means the retirement plan available to a member
 under this act.
       (12) "Tier 2" means the retirement plan established pursuant
 to section 401(k) of the internal revenue code, 26 USC 401, that is
 available to qualified participants under sections 62 to 74.
       Enacting section 1. This amendatory act does not take effect
 unless all of the following bills of the 102nd Legislature are
 enacted into law:
       (a) Senate Bill No.____ or House Bill No. 4666 (request no.
 00751'23).
       (b) Senate Bill No.____ or House Bill No. 4667 (request no.
 00754'23).
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Statutes affected: 
House Introduced Bill: 38.1603, 38.1604