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LEGISLATURE OF NEBRASKA
ONE HUNDRED SIXTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 36
Introduced by Kolterman, 24.
Read first time January 10, 2019
Committee: Nebraska Retirement Systems
1 A BILL FOR AN ACT relating to the School Employees Retirement Act; to
2 amend section 79-927, Reissue Revised Statutes of Nebraska, and
3 sections 79-902 and 79-921, Revised Statutes Cumulative Supplement,
4 2018; to redefine creditable service for certain member employees;
5 to change a deadline for payment for restoration of relinquished
6 creditable service; to change provisions relating to required forms
7 of payment and service credit computation; and to repeal the
8 original sections.
9 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Section 79-902, Revised Statutes Cumulative Supplement,
2 2018, is amended to read:
3 79-902 For purposes of the School Employees Retirement Act, unless
4 the context otherwise requires:
5 (1) Accumulated contributions means the sum of all amounts deducted
6 from the compensation of a member and credited to his or her individual
7 account in the School Retirement Fund together with regular interest
8 thereon, compounded monthly, quarterly, semiannually, or annually;
9 (2)(a) Actuarial equivalent means the equality in value of the
10 aggregate amounts expected to be received under different forms of
11 payment.
12 (b) For a school employee hired before July 1, 2017, the
13 determinations shall be based on the 1994 Group Annuity Mortality Table
14 reflecting sex-distinct factors blended using twenty-five percent of the
15 male table and seventy-five percent of the female table. An interest rate
16 of eight percent per annum shall be reflected in making these
17 determinations except when a lump-sum settlement is made to an estate.
18 (c) For a school employee hired on or after July 1, 2017, or rehired
19 on or after July 1, 2017, after termination of employment and being paid
20 a retirement benefit or taking a refund of contributions, the
21 determinations shall be based on a unisex mortality table and an interest
22 rate specified by the board. Both the mortality table and the interest
23 rate shall be recommended by the actuary and approved by the retirement
24 board following an actuarial experience study, a benefit adequacy study,
25 or a plan valuation. The mortality table, interest rate, and actuarial
26 factors in effect on the school employee's retirement date will be used
27 to calculate actuarial equivalency of any retirement benefit. Such
28 interest rate may be, but is not required to be, equal to the assumed
29 rate.
30 (d) If the lump-sum settlement is made to an estate, the interest
31 rate will be determined by the AAA-rated segment of the Bloomberg
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1 Barclays Long U.S. Corporate Bond Index as of the prior June 30, rounded
2 to the next lower quarter percent. If the AAA-rated segment of the
3 Bloomberg Barclays Long U.S. Corporate Bond Index is discontinued or
4 replaced, a substitute index shall be selected by the board which shall
5 be a reasonably representative index;
6 (3) Beneficiary means any person in receipt of a school retirement
7 allowance or other benefit provided by the act;
8 (4)(a) Compensation means gross wages or salaries payable to the
9 member for personal services performed during the plan year and includes
10 (i) overtime pay, (ii) member retirement contributions, (iii) retroactive
11 salary payments paid pursuant to court order, arbitration, or litigation
12 and grievance settlements, and (iv) amounts contributed by the member to
13 plans under sections 125, 403(b), and 457 of the Internal Revenue Code as
14 defined in section 49-801.01 or any other section of the code which
15 defers or excludes such amounts from income.
16 (b) Compensation does not include (i) fraudulently obtained amounts
17 as determined by the retirement board, (ii) amounts for accrued unused
18 sick leave or accrued unused vacation leave converted to cash payments,
19 (iii) insurance premiums converted into cash payments, (iv) reimbursement
20 for expenses incurred, (v) fringe benefits, (vi) per diems paid as
21 expenses, (vii) bonuses for services not actually rendered, (viii) early
22 retirement inducements, (ix) cash awards, (x) severance pay, or (xi)
23 employer contributions made for the purposes of separation payments made
24 at retirement.
25 (c) Compensation in excess of the limitations set forth in section
26 401(a)(17) of the Internal Revenue Code as defined in section 49-801.01
27 shall be disregarded. For an employee who was a member of the retirement
28 system before the first plan year beginning after December 31, 1995, the
29 limitation on compensation shall not be less than the amount which was
30 allowed to be taken into account under the retirement system as in effect
31 on July 1, 1993;
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1 (5) County school official means (a) until July 1, 2000, the county
2 superintendent or district superintendent and any person serving in his
3 or her office who is required by law to have a teacher's certificate and
4 (b) on or after July 1, 2000, the county superintendent, county school
5 administrator, or district superintendent and any person serving in his
6 or her office who is required by law to have a teacher's certificate;
7 (6)(a) Creditable service means prior service for which credit is
8 granted under sections 79-926 to 79-929, service credit purchased under
9 sections 79-933.03 to 79-933.06 and 79-933.08, and all service rendered
10 while a contributing member of the retirement system; and
11 (b) Creditable For employees hired prior to July 1, 2018, creditable
12 service includes working days, sick days, vacation days, holidays, and
13 any other leave days for which the employee is paid regular wages as part
14 of the employee's agreement with the employer. Creditable service does
15 not include lump-sum payments to the employee upon termination or
16 retirement in lieu of accrued benefits for such days, eligibility and
17 vesting credit, service years for which member contributions are
18 withdrawn and not repaid by the member, service rendered for which the
19 retirement board determines that the member was paid less in compensation
20 than the minimum wage as provided in the Wage and Hour Act, or service
21 which the board determines was rendered with the intent to defraud the
22 retirement system, or service provided to an employer in a retirement
23 system established pursuant to the Class V School Employees Retirement
24 Act;
25 (c) For employees hired on or after July 1, 2018, creditable service
26 includes working days, used accrued sick days, used accrued vacation
27 days, federal and state holidays, and jury duty leave for which the
28 member is paid full compensation by the employer. Creditable service does
29 not include lump-sum payments to the employee upon termination or
30 retirement in lieu of accrued benefits for such days, eligibility and
31 vesting credit, service years for which member contributions are
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1 withdrawn and not repaid by the member, service rendered for which the
2 retirement board determines that the member was paid less in compensation
3 than the minimum wage as provided in the Wage and Hour Act, service which
4 the board determines was rendered with the intent to defraud the
5 retirement system, or any other type of leave not expressly included in
6 this subdivision; and
7 (d) Creditable service does not include service provided to an
8 employer in the retirement system provided under the Class V School
9 Employees Retirement Act;
10 (7) Current benefit means the initial benefit increased by all
11 adjustments made pursuant to the School Employees Retirement Act;
12 (8) Disability means an inability to engage in any substantially
13 gainful activity by reason of any medically determinable physical or
14 mental impairment which was initially diagnosed or became disabling while
15 the member was an active participant in the plan and which can be
16 expected to result in death or be of a long-continued and indefinite
17 duration;
18 (9) Disability retirement allowance means the annuity paid to a
19 person upon retirement for disability under section 79-952;
20 (10) Disability retirement date means the first day of the month
21 following the date upon which a member's request for disability
22 retirement is received on a retirement application provided by the
23 retirement system if the member has terminated employment in the school
24 system and has complied with sections 79-951 to 79-954 as such sections
25 refer to disability retirement;
26 (11) Early retirement inducement means, but is not limited to:
27 (a) A benefit, bonus, or payment to a member in exchange for an
28 agreement by the member to terminate from employment;
29 (b) A benefit, bonus, or payment paid to a member in addition to the
30 member's retirement benefit;
31 (c) Lump-sum or installment cash payments, except payments for
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1 accrued unused leave converted to cash payments;
2 (d) An additional salary or wage component of any kind that is being
3 paid as an incentive to leave employment and not for personal services
4 performed for which creditable service is granted;
5 (e) Partial or full employer payment of a member's health, dental,
6 life, or long-term disability insurance benefits or cash in lieu of such
7 insurance benefits that extend beyond the member’s termination of
8 employment and contract of employment dates. This subdivision does not
9 apply to any period during which the member is contributing to the
10 retirement system and being awarded creditable service; and
11 (f) Any other form of separation payments made by an employer to a
12 member at termination, including, but not limited to, purchasing
13 retirement annuity contracts for the member pursuant to section 79-514,
14 depositing money for the member in an account established under section
15 403(b) of the Internal Revenue Code except for payments for accrued
16 unused leave, or purchasing service credit for the member pursuant to
17 section 79-933.08;
18 (12) Eligibility and vesting credit means credit for years, or a
19 fraction of a year, of participation in a Nebraska government plan for
20 purposes of determining eligibility for benefits under the School
21 Employees Retirement Act. Such credit shall not be included as years of
22 creditable service in the benefit calculation;
23 (13) Emeritus member means a person (a) who has entered retirement
24 under the provisions of the act, including those persons who have retired
25 since July 1, 1945, under any other regularly established retirement or
26 pension system as contemplated by section 79-916, (b) who has thereafter
27 been reemployed in any capacity by a public school, a Class V school
28 district, or a school under the control and management of the Board of
29 Trustees of the Nebraska State Colleges, the Board of Regents of the
30 University of Nebraska, or a community college board of governors or has
31 become a state school official or county school official subsequent to
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1 such retirement, and (c) who has applied to the board for emeritus
2 membership in the retirement system. The school district or agency shall
3 certify to the retirement board on forms prescribed by the retirement
4 board that the annuitant was reemployed, rendered a service, and was paid
5 by the district or agency for such services;
6 (14) Employer means the State of Nebraska or any subdivision thereof
7 or agency of the state or subdivision authorized by law to hire school
8 employees or to pay their compensation;
9 (15)(a) Final average compensation means:
10 (i) Except as provided in subdivision (ii) of this subdivision:
11 (A) The sum of the member's total compensation during the three
12 twelve-month periods of service as a school employee in which such
13 compensation was the greatest divided by thirty-six; or
14 (B) If a member has such compensation for less than thirty-six
15 months, the sum of the member's total compensation in all months divided
16 by the total number of months of his or her creditable service therefor;
17 and
18 (ii) For an employee who became a member on or after July 1, 2013:
19 (A) The sum of the member's total compensation during the five
20 twelve-month periods of service as a school employee in which such
21 compensation was the greatest divided by sixty; or
22 (B) If a member has such compensation for less than sixty months,
23 the sum of the member's total compensation in all months divided by the
24 total number of months of his or her creditable service therefor.
25 (b) Payments under the Retirement Incentive Plan pursuant to section
26 79-855 and Staff Development Assistance pursuant to section 79-856 shall
27 not be included in the determination of final average compensation;
28 (16) Fiscal year means any year beginning July 1 and ending June 30
29 next following;
30 (17) Hire date or date of hire means the first day of compensated
31 service subject to retirement contributions;
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1 (18) Initial benefit means the retirement benefit calculated at the
2 time of retirement;
3 (19) Member means any person who has an account in the School
4 Retirement Fund;
5 (20) Participation means qualifying for and making required deposits
6 to the retirement system during the course of a plan year;
7 (21) Plan year means the twelve-month period beginning on July 1 and
8 ending on June 30 of the following year;
9 (22) Prior service means service rendered as a school employee in
10 the public schools of the State of Nebraska prior to July 1, 1945;
11 (23) Public school means any and all schools offering instruction in
12 elementary or high school grades, as defined in section 79-101, which
13 schools are supported by public funds and are wholly under the control
14 and management of the State of Nebraska or any subdivision thereof,
15 including (a) schools or other entities established, maintained, and
16 controlled by the school boards of local school districts, except Class V
17 school districts, (b) any educational service unit, and (c) any other
18 educational institution wholly supported by public funds, except schools
19 under the control and management of the Board of Trustees of the Nebraska
20 State Colleges, the Board of Regents of the University of Nebraska, or
21 the community college boards of governors for any community college
22 areas;
23 (24) Regular employee means an employee hired by a public school or
24 under contract in a regular full-time or part-time position who works a
25 full-time or part-time schedule on an ongoing basis for twenty or more
26 hours per week. An employee hired as described in this subdivision to
27 provide service for less than twenty hours per week but who provides
28 service for an average of twenty hours or more per week in each calendar
29 month of any three calendar months of a