Bill Text: MI HB6061 | 2023-2024 | 102nd Legislature | Introduced
Bill Title: Retirement: defined benefit; defined benefit plan and retiree health for new hires and election option for current employees; provide for. Amends secs. 1i, 13, 64 & 68 of 1943 PA 240 (MCL 38.1i et seq.) & adds secs. 19k & 50b.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced) 2024-11-13 - Bill Electronically Reproduced 11/13/2024 [HB6061 Detail]
Download: Michigan-2023-HB6061-Introduced.html
HOUSE BILL NO. 6061
A bill to amend 1943 PA 240, entitled
"State employees' retirement act,"
by amending sections 1i, 13, 64, and 68 (MCL 38.1i, 38.13, 38.64, and 38.68), section 1i as amended by 2004 PA 33, section 13 as amended by 2018 PA 682, and sections 64 and 68 as amended by 2011 PA 264, and by adding sections 19k and 50b.
the people of the state of michigan enact:
Sec. 1i. (1) "Service" means service rendered to this state by an elected or appointed state official or employee of this state. Credit for service shall must be determined by appropriate rules and regulations of the retirement board, but not more than 1 year of service shall must be creditable for all service in 1 calendar year. The retirement board shall not allow credit for service for any period of more than 1 month in any 1 calendar year during which the employee was absent without pay. However, full service credit shall must be given for a period during which an employee is on leave of absence and is receiving worker's compensation benefits as the result of a duty-incurred disability. Full service credit shall must also be given to an employee for required 1-day layoffs, for voluntary or involuntary participation in pay reduction plan A, pay reduction plan B, or both, in effect during the fiscal years ending on and after September 30, 29, 1981, for required and designated temporary layoffs, and, beginning October 1, 2003, for furlough hours, and for participation in the banked leave time program.
(2) "State treasurer" means the treasurer of this state.
(3) "Tier 1" means the any of the following:
(a) The retirement plan available to a member under this act who was first employed and entered upon on the payroll before March 31, 1997 and who does not elect to become a qualified participant of Tier 2.
(b) The retirement plan available to a member under this act who was first employed and entered on the payroll after March 30, 1997 and before the effective date of the amendatory act that added section 50b who elects to become a member of Tier 1 under section 50b.
(c) A member who was first employed and entered on the payroll on or after the effective date of the amendatory act that added section 50b.
(4) "Tier 2" means the retirement plan established pursuant to under section 401(k) of the internal revenue code, 26 USC 401, that is available to qualified participants under sections 50 to 69.
Sec. 13. (1) Except as otherwise provided in this act, membership in the retirement system consists of state employees occupying permanent positions in the state civil service. All state employees except those specifically excluded by law and those who are members or eligible to be members of other statutory retirement systems in this state, must become members of the retirement system. The employees may use service previously performed as an employee of this state in meeting the service requirements for the retirement allowances and death benefits provided by the retirement system. However, the prior service must not be used in computing the amount of a retirement allowance to be paid by the retirement system unless the employee pays to the retirement system the amount the employee's contributions would have been had the employee become a member immediately on employment by the this state with interest compounded annually at the regular rate from a date 1 year after the date of employment by this state to the date of payment. An individual who draws compensation as a state employee of a political subdivision of this state is eligible for the benefits provided by this act to the extent of the individual's compensation paid by this state. An individual who meets the requirements of section 44a is a member of the retirement system.
(2) Elected or appointed state officials may elect not to become or continue as members of the retirement system by filing written notice with the retirement board. An appointed state official who is a member of a state board, commission, or council and who receives a per diem rate in his or her capacity as a member of the board, commission, or council is excluded from membership in the retirement system for the service rendered in his or her capacity as a member of the board, commission, or council. Service performed by an elected or appointed official during the time the official elects not to participate must not be used in meeting the service requirement or in computing the amount of retirement allowance to be paid by the retirement system. A member who elects not to participate must be refunded all contributions made before the election.
(3) Membership in the retirement system does not include any of the following:
(a) A person who is a contributing member in the public school employees' retirement system provided for in the public school employees retirement act of 1979, 1980 PA 300, MCL 38.1301 to 38.1437.
(b) A person who is a contributing member in the Michigan judges retirement system provided for in the judges retirement act of 1992, 1992 PA 234, MCL 38.2101 to 38.2670.
(c) A person who comes within the Michigan state police retirement system provided for in the state police retirement act of 1986, 1986 PA 182, MCL 38.1601 to 38.1675.38.1674.
(d) An individual who is first employed and entered upon on the payroll on or after March 31, 30, 1997 and before the effective date of the amendatory act that added section 50b for employment for which the individual would have been eligible for membership under this section before March 31, 1997 who did not elect to become a member of Tier 1 under section 50b. An individual described in this subdivision is eligible to be a qualified participant in Tier 2 subject to sections 50 to 69.
(e) Except as provided in section 19g, an individual who elects to terminate membership under section 50 and who, but for that election, would otherwise be eligible for membership in Tier 1 under this section.
(f) A retirant who again becomes employed by the this state and is entered upon on the payroll on or after December 1, November 30, 2002, for employment for which the retirant would have been eligible for membership under this section before December 1, 2002. A retirant described in this subdivision is a qualified participant in Tier 2 subject to sections 50 to 69.
(4) An individual who is hired in state classified or unclassified service after June 30, 1974, who is first employed and entered upon on the payroll before March 31, 1997, and who possesses a Michigan teaching certificate is a member of this retirement system. After June 30, 1974, but before March 31, 1997, an individual who returns to state employment in the classified or unclassified service who previously was a contributing member of the Michigan public school employees' retirement system shall must have the individual's accumulated contributions and service transferred to this retirement system, or having withdrawn the contributions, may pay into the retirement system the amount withdrawn together with regular interest and have credit restored as provided for in section 16. On and after After March 31, 30, 1997, an individual described in this subsection who returns to state service shall make an irrevocable election to remain in Tier 1 or to become a qualified participant of Tier 2 in the manner prescribed in section 50.
(5) An individual, not regularly employed by this state, who is employed through participation in 1 or more of the following programs, shall is not be a member of the retirement system and must not receive service credit for the employment:
(a) A program authorized, undertaken, and financed pursuant to under the comprehensive employment and training act of 1973, former Public Law 93-203, 87 Stat . 839.
(b) A summer youth employment program established under the Michigan youth corps act, 1983 PA 69, MCL 409.221 to 409.229.
(c) A program established pursuant to under the job training partnership act, Public Law 97-300, 96 Stat . 1322.
(d) A program established pursuant to under the Michigan opportunity and skills training program, first established under sections 12 to 23 of 1983 PA 259.
(e) A program established pursuant to under the Michigan community service corps program, first established under sections 25 to 35 of 1983 PA 259.
(6) An individual, not regularly employed by this state, who is employed to administer a program described in subsection (5) is not a member of the retirement system and must not receive service credit for the employment.
(7) If an individual described in subsection (5)(a) later becomes a member of this retirement system within 12 months after the date of termination as a participant in a transitional public employment program, service credit shall must be given for employment that is excluded in subsection (5) for purposes of determining a retirement allowance on the payment by the individual's employer under subsection (5) from funds provided under the comprehensive employment and training act of 1973, former Public Law 93-203, 87 Stat . 839, as funds permit, to the retirement system of the contributions, plus regular interest, the employer would have paid had the employment been rendered in a position covered by this act. During the individual's employment in the transitional public employment program, the individual's employer shall place in reserve a reasonable but not necessarily an actuarially determined amount equal to the contributions that the employer would have paid to the retirement system for those employees in the transitional public employment program as if they were members under this act, but only for that number of employees that the employer determined would move from the transitional public employment program into positions covered by this act. If the funds provided under the comprehensive employment and training act of 1973, former Public Law 93-203, 87 Stat . 839, are insufficient, the remainder of the employer contributions must be paid by the individual's current employer.
(8) For purposes of section 19g, a former member is considered a member and is considered to have satisfied the requirements of section 19g(1)(c) and (2)(c) if the former member was employed by the department formerly known as the department of mental health on January 1, 1996 and went on layoff status before January 1, 1997.
Sec. 19k. A member who makes an election to be a member of Tier 1 under section 50b may purchase up to 5 years of service credit in a manner determined by the retirement system.
Sec. 50b. (1) The retirement system shall provide an opportunity for each qualified participant who is a qualified participant on December 31, 2024 to elect in writing to terminate participation in Tier 2 and elect to become a member in Tier 1. An election made by a qualified participant under this subsection is irrevocable. The retirement system shall accept written elections under this subsection from members during the period beginning on January 1, 2025 and ending on March 1, 2025. A qualified participant who does not make a written election or who does not file the election during the period specified in this subsection continues to be a qualified participant in Tier 2. A qualified participant who makes and files a written election under this subsection elects to do all of the following:
(a) Cease to be a qualified participant in Tier 2 effective 12 midnight, May 31, 2025.
(b) Become a member of Tier 1 effective 12:01 a.m., June 1, 2025.
(2) After consultation with the retirement system's actuary and the retirement board, the department of technology, management, and budget shall determine the method by which a qualified participant shall make a written election under this section. If the qualified participant is married at the time of the election, the election is not effective unless the election is signed by the individual's spouse. However, the retirement board may waive this requirement if the spouse's signature cannot be obtained because of extenuating circumstances.
(3) The service credit for a qualified participant who elects to make an election under this section to become a member of Tier 1 must not be used for any of the following:
(a) Satisfying the minimum number of years of service credit required to receive a retirement allowance under this act.
(b) Calculating the member's retirement allowance.
(c) Satisfying the minimum number of years of service credit required to receive health benefits under section 68.
(4) An election under this section is subject to the eligible domestic relations order act, 1991 PA 46, MCL 38.1701 to 38.1711.
(5) If the department of technology, management, and budget receives notification from the United States Internal Revenue Service that this section or any portion of this section will cause the retirement system to be disqualified for tax purposes under the internal revenue code, then the portion that will cause the disqualification does not apply.
Sec. 64. (1) A qualified participant is immediately 100% vested in his or her the qualified participant's contributions made to Tier 2 and employer contributions under the banked leave time program. Except as otherwise provided in this section, a qualified participant shall vest in the employer contributions made on his or her the qualified participant's behalf to Tier 2 according to the following schedule:
(a) Upon completion of 2 years of service, 50%.
(b) Upon completion of 3 years of service, 75%.
(c) Upon completion of 4 years of service, 100%.
(2) A qualified participant is eligible for the health insurance coverage provided in section 68 if the qualified participant meets 1 of the following requirements:
(a) The qualified participant has completed 10 years of service as a qualified participant, was not a member, deferred member, or former nonvested member of Tier 1 , was first employed and entered upon the payroll of his or her employer before January 1, 2012, and did not make an election to opt out of health insurance coverage under section 68b.
(b) The qualified participant was a member, deferred member, or former nonvested member of Tier 1 who made an election to participate in Tier 2 pursuant to under section 50, and who has met the service requirements he or she the qualified participant, deferred member, or former nonvested member of Tier 1 would have been required to meet in order to vest in health benefits under section 20d.
Sec. 68. (1) A former qualified participant may elect health insurance benefits in the manner prescribed in this section if he or she meets both of the following requirements:
(a) The former qualified participant is eligible for health benefits under section 64(2).
(b) The former qualified participant meets or exceeds the benefit commencement age employed in the actuarial present value calculation under section 51 and the service requirements that would have applied to that former qualified participant under Tier 1 for receiving health insurance coverage under section 20d, if that former qualified participant was a member of Tier 1.
(2) A former qualified participant who is eligible to elect health insurance coverage under subsection (1) may elect health insurance coverage in a health benefit plan or plans as authorized by section 20d. A former qualified participant who is eligible to elect health insurance coverage under subsection (1) may also elect health insurance coverage for his or her health benefit dependents, if any. A surviving health benefit dependent of a deceased former qualified participant who is eligible to elect health insurance coverage under subsection (1) may elect health insurance coverage in the manner prescribed in this section.
(3) An individual who elects health insurance coverage under this section shall become a member of a health insurance coverage group authorized pursuant to under section 20d.
(4) For a former qualified participant who is eligible to elect health insurance coverage under subsection (1) and who is eligible for those benefits under section 64(2)(a), and for his or her the former qualified participant's health benefit dependents, this state shall pay a portion of the health insurance premium as calculated under this subsection on a cash disbursement method. An individual described in this subsection who elects health insurance coverage under this section shall pay to the retirement system the remaining portion of the health insurance coverage premium not paid by this state under this subsection. For a former qualified participant who commenced state employment before April 1, 2010 and for his or her the former qualified participant's health benefit dependents, the portion of the health insurance coverage premium paid by this state under this subsection shall must be equal to the product of 3% and the former qualified participant's years of service, up to 30 years, but shall must not exceed the lesser of 90% of the payments for health insurance coverage or the portion of the health insurance coverage premiums payable by this state for a retirant, his or her the former qualified participant's beneficiary, and his or her the former qualified participant's dependents under section 20d. If the individual elects the health insurance coverage provided under section 20d, the state shall transfer its portion of the amount calculated under this subsection to the health insurance reserve fund created by section 11. For a former qualified participant who commenced state employment on or after April 1, 2010 and for his or her the former qualified participant's health benefit dependents, the portion of the health insurance coverage premium paid by this state under this subsection shall must be equal to the product of 3% and the former qualified participant's years of service, up to 30 years, but shall must not exceed the lesser of the portion of the health insurance coverage premiums payable by this state for a retirant, his or her the former qualified participant's beneficiary, and his or her the former qualified participant's dependents under section 20d or the portion of the health insurance coverage premiums payable by this state for a member who occupies a position in the classified state civil service or has classified civil service status commencing state employment on or after April 1, 2010.
(5) For a former qualified participant who is eligible to elect health insurance coverage under subsection (1) and who is eligible for those benefits under section 64(2)(b), and for his or her the former qualified participant's health benefit dependents, this state shall pay a portion of the health insurance premium as calculated under this subsection on a cash disbursement method. An individual described in this subsection who elects health insurance coverage under this section shall pay to the retirement system the remaining portion of the health insurance coverage premium not paid by this state under this subsection. The portion of the health insurance coverage premium paid by this state under this subsection shall must be equal to the premium amounts paid on behalf of retirants of Tier 1 for health insurance coverage under section 20d. If the individual elects the health insurance coverage provided under section 20d, the state shall transfer its portion of the amount calculated under this subsection to the health insurance reserve fund created by section 11.
(6) Beginning January 1, 2011, any former qualified participant or health benefit dependent who is eligible to elect health insurance coverage under this section and who previously elected coverage under a different plan than the plan authorized under section 20d may either elect coverage under this section or may at his or her the former qualified participant's or health benefit dependent's own cost participate in coverage under a different plan than the plan authorized under section 20d.
(7) If the department of technology, management, and budget receives notification from the United States internal revenue service Internal Revenue Service that this section or any portion of this section will cause the retirement system to be disqualified for tax purposes under the internal revenue code, then the portion that will cause the disqualification does not apply.
(8) As used in this section, "health insurance coverage" means the hospitalization and medical insurance, dental coverage, vision coverage, and any other health care insurance provided in section 20d.
(9) Subsections (1) to (8) do not apply to a qualified participant or former qualified participant who was first employed and entered upon the payroll of his or her the qualified participant's or former qualified participant's employer on or after January 1, 2012 or who made the election to opt out of health insurance coverage under section 68b. This subsection does not apply after the amendatory act that added section 50b.
(10) A former qualified participant may enroll in the same retiree health care plan offered by this state and available to former qualified participants who commenced state employment on or after April 1, 2010, if he or she the former qualified participant meets all of the following requirements:
(a) The former qualified participant made the election to opt out of health insurance coverage under section 68b. or was first employed and entered on the payroll of his or her employer on or after January 1, 2012.
(b) The former qualified participant meets or exceeds the benefit commencement age as set forth in section 51(3)(b)(iii).
(c) The former qualified participant enrolls immediately on termination.
(d) The former qualified participant has not previously disenrolled from the plan.
(e) The former qualified participant pays the total cost of the plan.
