Bill Summary – FastDemocracy

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68th Legislature 2023                                                                                             SB 74
                                                 SENATE BILL NO. 74
                                          INTRODUCED BY W. MCKAMEY
                                          (Primary Sponsor)
                       BY REQUEST OF THE PUBLIC EMPLOYEES' RETIREMENT BOARD
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  A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING LAWS RELATED TO THE PUBLIC
  EMPLOYEES' RETIREMENT SYSTEMS ADMINISTERED BY THE PUBLIC EMPLOYEES' RETIREMENT
  BOARD; CORRECTING INTEREST PAID UPON REDEPOSITS OF REFUNDED CONTRIBUTIONS TO
  ACTUARIAL ASSUMED RATE OF RETURN; ALLOWING FOR LIMITED INFORMATION SHARING WITH
  EMPLOYERS; REQUIRING PAYMENT TO THE TRUST OF A MINOR BENEFICIARY; CLARIFYING THE
  APPLICATION OF EXCESS EARNINGS FOR CALCULATION OF HIGHEST AND FINAL AVERAGE
  COMPENSATION; REVISING THE DEFINITION OF "COMPENSATION"; REVISING MEMBERSHIP IN THE
  PUBLIC EMPLOYEES' RETIREMENT SYSTEM; CLARIFYING PROVISIONS REGARDING THE TRANSFER
  AND PURCHASE OF SERVICE CREDITS FROM THE TEACHERS' RETIREMENT SYSTEM; ALLOWING
  MEMBERS TO VOLUNTARILY CANCEL A DISABILITY RETIREMENT BENEFIT; CLARIFYING WORKING
  RETIREE LIMITS; CLARIFYING THE DEFINITION OF "SHERIFF" RELATED TO THE SHERIFFS'
  RETIREMENT SYSTEM; PROVIDING A TIME LIMIT FOR BOARD APPROVAL OF LATE FIRE COMPANY
  ANNUAL CERTIFICATES AND TRAINING RECORDS; AMENDING SECTIONS 19-2-403, 19-2-603, 19-2-803,
  19-2-1005, 19-3-108, 19-3-318, 19-3-403, 19-3-511, 19-3-1015, 19-3-1106, 19-3-1211, 19-5-612, 19-6-612, 19-
  7-101, 19-7-612, 19-8-712, 19-9-904, 19-13-805, AND 19-17-112, MCA; AND PROVIDING EFFECTIVE
  DATES.”
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  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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          Section 1. Section 19-2-403, MCA, is amended to read:
          "19-2-403.   Powers and duties of board. (1) The board shall administer the provisions of the
  chapters enumerated in 19-2-302.
          (2)      The board may establish rules that it considers proper for the administration and operation of
  the retirement systems and enforcement of the chapters under which each retirement system is established.
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68th Legislature 2023                                                                                                 SB 74
          (3)      The board shall establish uniform rules that are necessary to determine service credit for
  fractional years of service.
          (4)      The board shall determine who are employees within the meaning of each retirement system.
  The board is the sole authority for determining the conditions under which persons may become members of
  and receive benefits under the retirement systems. A person whose job duties require proportional membership
  in more than one retirement system is subject to the provisions of those systems.
          (5)      If fraud or error results in an employee or member being reported to the incorrect retirement
  system, the board shall correct the error and adjust contributions as necessary.
          (6)      The board shall determine and may modify retirement benefits under the retirement systems.
  Benefits may be paid only if the board decides, in its discretion, that the applicant is, under the provisions of the
  appropriate retirement system, entitled to the benefits.
          (7)      In matters of board discretion under the systems, the board shall treat all persons in similar
  circumstances in a uniform and nondiscriminatory manner.
          (8)      (a) The board shall maintain records and accounts it determines necessary for the
  administration of the retirement systems.
          (b)      Information from a member's record may be shared with a member's employer only as far as
  necessary to conduct official business on behalf of the member.
          (9)      The board shall enter into memoranda of understanding with the teachers' retirement system to
  exchange retirement system-related confidential information regarding members, former members, or retirees.
  A memorandum must state that:
          (a)      the information may be used only for reasons related to verifying appropriate pension plan
  participation; and
          (b)      the requesting retirement system agrees to protect the confidentiality of the information and will
  disclose the requested information only as necessary to conduct official business.
          (10)     Upon the basis of the findings of the actuary pursuant to 19-2-405, the board shall adopt
  actuarial rates and rates of regular interest it determines appropriate for the administration of the retirement
  systems.
          (11)     The board shall review the sufficiency of benefits paid by the retirement system or plan and
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68th Legislature 2023                                                                                              SB 74
  recommend to the legislature those changes in benefits in a defined benefit plan or in contributions under the
  defined contribution plan that may be necessary for members and their beneficiaries to maintain a stable
  standard of living.
          (12)     The board may implement third-party mailings under the provisions of 2-6-1017. If third-party
  mailings are implemented, the board shall adopt rules governing means of implementation, including the
  specification of eligible third parties, appropriate materials, and applicable fees and procedures. Fees
  generated by third-party mailings must be deposited in the appropriate retirement system fund for the benefit of
  participants of retirement systems or plans administered by the board.
          (13)     In discharging duties, the board, a member of the board, or an authorized representative of the
  board may conduct hearings, administer oaths and affirmations, take depositions, certify to official acts and
  records, and issue subpoenas to compel the attendance of witnesses and the production of books, papers,
  correspondence, memoranda, and other records. Subpoenas must be issued and enforced pursuant to 2-4-104
  of the Montana Administrative Procedure Act.
          (14)     The board may by rule or otherwise delegate to the board's executive director or any other staff
  member any of the powers or duties conferred by law upon the board except as otherwise provided by law and
  except for the adoption of rules and the issuance of final orders after hearings held pursuant to subsection (13)
  or the contested case procedure of the Montana Administrative Procedure Act.
          (15)     The board shall perform other duties and may exercise the powers concerning the defined
  contribution plan for plan members as provided in chapter 3, part 21, of this title."
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          Section 2. Section 19-2-603, MCA, is amended to read:
          "19-2-603.    Reinstatement after withdrawal of contributions. Except as otherwise provided in
  chapter 3, part 21, of this title and this section, a person who again becomes an active member of a defined
  benefit plan subsequent to the refund of the person's accumulated contributions after a termination of previous
  membership is considered a new member without previous membership service or service credit. The person,
  while either an active or inactive vested member, may reinstate that membership service or service credit by
  redepositing the sum of the accumulated contributions that were refunded to the person at the last termination
  of the person's membership plus the interest that would have been credited to the person's accumulated
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68th Legislature 2023                                                                                                      SB 74
  contributions had the refund not taken place at the actuarial assumed rate of return in effect at the time of the
  redeposit. If the person makes this redeposit, the membership service and service credit previously canceled
  must be reinstated."
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           Section 3. Section 19-2-803, MCA, is amended to read:
           "19-2-803.    Payment to custodian of minor beneficiary. (1) Except as provided in subsection (2), if
  any benefit from a system is payable to a minor, the benefit must be paid to one of the following:
           (a)      a surviving parent, if any;
           (b)      a parent awarded custody of the minor in a divorce proceeding;
           (c)      a custodian designated under Title 72, chapter 26;
           (d)      a guardian appointed pursuant to Title 72, chapter 5, part 2; or
           (e)      a conservator appointed pursuant to Title 72, chapter 5, part 4.
           (2)      If any benefit payable from the highway patrol officers' retirement system under chapter 6 of
  this title, the municipal police officers' retirement system under chapter 9 of this title, or the firefighters' unified
  retirement system under chapter 13 of this title is payable to a statutory beneficiary who is a dependent child,
  as defined under the provisions of that system, of a system member and the system member has established a
  trust for the dependent child, When a system member has established a trust for a minor beneficiary, including
  a dependent child as defined under the provisions of Title 19, chapter 6, 9, or 13, then the benefit must be paid
  to the trustee of that trust.
           (3)      The payment must be in full and complete discharge and acquittance of the board and system
  on account of the benefit. The person receiving benefit payments pursuant to this section shall account to the
  minor for the money when the minor reaches the age of majority."
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           Section 4. Section 19-2-1005, MCA, is amended to read:
           "19-2-1005. Compensation limit. (1) A retirement system or plan subject to this chapter may not take
  into account compensation of a member in excess of the amount permitted in section 401(a)(17) of the Internal
  Revenue Code, 26 U.S.C. 401(a)(17), as adjusted for cost-of-living increases in accordance with section
  401(a)(17)(B) of the Internal Revenue Code, 26 U.S.C. 401(a)(17)(B).
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68th Legislature 2023                                                                                               SB 74
          (2)      (a) Except as provided in subsection (2)(b), for a member hired on or after July 1, 2013, when
  calculating the highest average compensation for a member with at least 72 months of service credit or the final
  average compensation for a member with 48 months of service credit, a retirement system or plan subject to
  this chapter may not include the following amounts of excess earnings in the calculation of a the member's
  highest average compensation or final average compensation:
          (i)      for the first year included in the calculation, any compensation that is greater than 110% of the
  compensation paid to the member in the previous year; and
          (ii)     for each subsequent year included in the calculation, any compensation that is greater than
  110% of the compensation included in the calculation for the previous year.
          (b)      In determining a member's retirement benefit, total excess earnings, if any, must be divided by
  the member's total months of service credit and added to each month's compensation included in the member's
  highest average compensation or final average compensation as limited under subsection (2)(a)."
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          Section 5. Section 19-3-108, MCA, is amended to read:
          "19-3-108.   Definitions. Unless the context requires otherwise, as used in this chapter, the following
  definitions apply:
          (1)      (a) "Compensation" means remuneration paid out of funds controlled by an employer in
  payment for the member's services or for time during which the member is excused from work because of a
  holiday or because the member has taken compensatory leave, sick leave, annual leave, banked holiday time,
  or a leave of absence before any pretax deductions allowed by state or federal law are made.
          (b)      Compensation does not include:
          (i)      the contributions made pursuant to 19-3-403(4)(a)(6)(a) for members of a bargaining unit;
          (ii)     in-kind goods provided by the employer, such as uniforms, housing, transportation, or meals;
          (iii)    in-kind services, such as the retraining allowance paid pursuant to 2-18-622, or employment-
  related services;
          (iv)     contributions to group insurance, such as that provided under 2-18-701 through 2-18-704;
          (v)      lump-sum payments for compensatory leave, sick leave, banked holiday time, or annual leave
  paid without termination of employment; or
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68th Legislature 2023                                                                                             SB 74
          (vi)     bonuses provided after July 1, 2013, that are one-time, or temporary payments in addition to
  and not considered part of base pay.;
          (vii)    remuneration paid to a member to reimburse the member for what would normally be the
  employer's costs of doing business, such as for workstation equipment or telecom services to facilitate
  telework; or
          (viii)   volunteer stipends.
          (2)      "Contracting employer" means any political subdivision or governmental entity that has
  contracted to come into the system under this chapter.
          (3)      "Defined benefit plan" means the plan within the public employees' retirement system
  established in 19-3-103 that is not the defined contribution plan.
          (4)      "Employer" means the state of Montana, its university system or any of the colleges, schools,
  components, or units of the university system for the purposes of this chapter, or any contracting employer.
          (5)      "Employer contributions" means payments to a pension trust fund pursuant to 19-3-316 from
  appropriations of the state of Montana and from contracting employers.
          (6)      (a) "Highest average compensation" means:
          (i)      for a member hired prior to July 1, 2011, the highest average monthly compensation during any
  36 consecutive months of membership service;
          (ii)     for a member hired on or after July 1, 2011, the highest average monthly compensation during
  any 60 consecutive months of membership service; or
          (iii)    in the event a member has not served the minimum specified period of service, the total
  compensation earned divided by the months of membership service.
          (b)      Lump-sum payments for compensatory leave, sick leave, banked holiday time, and annual
  leave paid to the member upon termination of employment may be used in the calculation of a retirement
  benefit only to the extent that they are used to replace, on a month-for-month basis, the regular compensation
  for a month or months included in the calculation of the highest average compensation. A lump-sum payment
  may not be added to a single month's compensation.
          (c)      Excess earnings limits must be applied to the calculation of the highest average compensation
  pursuant to 19-2-1005(2).
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68th Legislature 2023                                                                                                SB 74
          (7)      "System" or "retirement system" means the public employees' retirement system established in
  19-3-103."
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          Section 6. Section 19-3-318, MCA, is amended to read:
          "19-3-318.   Credit of contributions made after member becomes inactive. Contributions made on
  the basis of compensation earned by members after they are considered to be inactive members, as provided
  in 19-3-403(4)(6), must be credited to the employer."
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          Section 7. Section 19-3-403, MCA, is amended to read:
          "19-3-403.   Exclusions from membership. The following persons may not become members of the
  retirement system and, except as provided in subsection (7) (9), may not later purchase previous service under
  19-3-505:
          (1)      inmates or residents of state institutions or correctional institutions;
          (2)      persons in state institutions principally for the purpose of training but who receive
  compensation;
          (3)      independent contractors;
          (4)      volunteers;
          (5)      student interns, except that a student intern who later becomes an active member by otherwise
  becoming an employee may, after becoming an active member, affirmatively exercise the option of purchasing
  the service credit excluded by this subsection by applying to the board in writing to become eligible to receive
  service credit for the excluded service under the provisions of 19-3-505;
          (4)(6)   persons who are members of any other retirement or pension system supported wholly or in
  part by funds of the United States government, any state government, or political subdivision of the state and
  who are receiving credit in the other system for employment. It is the