H. B. 3041


(By Delegates Yeager, Dempsey, Willis, Sparks,

Williams and Shelton)


[Introduced March 4, 1999; referred to the

Committee on Pensions and Retirement

then Finance.]



A BILL to amend and reenact sections fourteen, fifteen, eighteen and twenty-five, article seven-a, chapter eighteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended; to amend and reenact sections nine and ten, article seven-b of said chapter; to amend article seven-b of said chapter by adding thereto a new section, designated section nineteen; and to amend and reenact sections six-a and six-b, article nine-a of said chapter, all relating to teachers' retirement; the teachers' retirement systems; eligibility for retirement allowance and early retirement; providing for retirement, with full pension rights, when a member's age plus years of contributing service equals or exceeds eighty; providing that the state teachers' retirement system is the single retirement program for all new employees whose employment commences on or after the first day of July, one thousand nine hundred ninety-nine; prohibiting any newly employed teacher from being admitted to the teachers' defined contribution retirement system; exceptions; employee contributions; increasing the employee and employer contributions to the retirement system; teachers accumulation fund; employers accumulation fund; benefit fund; reserve fund; expense fund; accumulation fund; teachers retirement fund allowance; fund transfers; unfunded liability allowance; local share; allocation of growth of local share; and increasing the appropriation determined by the actuarial evaluation for the teachers' retirement fund by the amount resulting from an increase in local share.

Be it enacted by the Legislature of West Virginia:
That sections fourteen, fifteen, eighteen and twenty-five, article seven-a, chapter eighteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; that sections nine and ten, article seven-b of said chapter be amended and reenacted; that article seven-b of said chapter be amended by adding thereto a new section, designated section nineteen; and that sections six-a and six-b, article nine-a of said chapter be amended and reenacted, all to read as follows:
 ARTICLE 7A. STATE TEACHERS RETIREMENT SYSTEM.
§18-7A-14. Contributions by members.

At the end of each month every member of the retirement system shall contribute six seven percent of that member's monthly earnable compensation to the retirement board: Provided, That any member employed by the West Virginia board of directors of the state college system or the board of trustees of the university system at an institution of higher education under its control shall contribute on the member's full earnable compensation, unless otherwise provided in section fourteen-a of this article.
Annually, the contributions of each member shall be credited to the member's account in the teachers accumulation fund. The contributions shall be deducted from the salaries of the members as herein prescribed, and every member shall be deemed to have given consent to such deductions. No deductions, however, shall may be made from the earnable compensation of any member who retired because of age or service, and then resumed service unless as provided in section thirteen-a of this article.
The aggregate of employer contributions, due and payable under this article, shall equal annually the total deductions from the earnable compensation of members required by this section. Beginning the first day of July, one thousand nine hundred ninety-four, the rate shall be seven and one-half percent; beginning on the first day of July, one thousand nine hundred ninety-five, the rate shall be nine percent; beginning on the first day of July, one thousand nine hundred ninety-six, the rate shall be ten and one-half percent; beginning on the first day of July, one thousand nine hundred ninety-seven, the rate shall be twelve percent; beginning on the first day of July, one thousand nine hundred ninety-eight, the rate shall be thirteen and one-half percent; and beginning on the first day of July, one thousand nine hundred ninety-nine and thereafter, the rate shall be fifteen percent; and beginning on the first day of July, two thousand and thereafter, the rate shall be sixteen percent.
Payment by an employer to a member of the sum specified in the employment contract minus the amount of the employee's deductions shall be deemed to be a full discharge of the employer's contractual obligation as to earnable compensation.
Each contributor shall file with the retirement board or with the employer to be forwarded to the retirement board an enrollment form showing the contributor's date of birth and other data needed by the retirement board.
§18-7A-15. Collection of membership contributions.

Each employer shall each month deduct six seven percent from the salary of each employee who is a member of the retirement system, in an amount not to exceed the amount named in section fourteen of this article, and shall at the end of each month remit to the retirement board the amounts so deducted, and shall transmit therewith a list of all new members employed and the name and number of members transferring from another county. At such times as the retirement board may deem advisable each employer shall report to the retirement board the total amount so deducted from the salary of each employee. The monthly payments which members would receive from employers as compensation for service in the absence of this article shall be decreased by the amount of the contribution due hereunder.
Each employer shall be held accountable for the sum composing the contributions made by its member employees. Whenever any county board of education shall fail to make timely remittance of the member contributions deducted as provided in this section, the board of school finance shall, upon request of the retirement board, deduct from the next allotment of state aid for schools made to such county board, and shall transfer to the retirement board, the amount so in default.
§18-7A-18. Funds created; fund transfers.

The funds created are the teachers accumulation fund, the employers accumulation fund, the benefit fund, the reserve fund and the expense fund. Each fund shall constitute a separate trust.
(a) The teachers accumulation fund shall be the fund in which the contributions of members shall be accumulated. The accumulated contributions of a member returned to the member upon that member's withdrawal, or paid to that member's estate or designated beneficiary in the event of death, shall be paid from the teachers accumulation fund. Any accumulated contributions forfeited by failure to claim such contributions shall be transferred from the teachers accumulation fund to the reserve fund.
(b) Beginning on the first day of July, one thousand nine hundred eighty-four, contributions of employers, shall be deposited in the employers accumulation fund through state appropriations, and such amounts shall be included in the budget bill submitted annually by the governor.
Beginning on the first day of July, one thousand nine hundred ninety-two and ninety-three, each county shall deposit in the employers accumulation fund an amount equal to six seven percent of all salary paid in excess of that authorized for minimum salaries in sections two and eight-a, article four, chapter eighteen-a of this code and any salary equity authorized in section five of said article or any county supplement equal to the amount distributed for salary equity among the counties; beginning on the first day of July, one thousand nine hundred ninety-four, the rate shall be seven and one-half percent; beginning on the first day of July, one thousand nine hundred ninety-five, the rate shall be nine percent; beginning on the first day of July, one thousand nine hundred ninety-six, the rate shall be ten and one-half percent; beginning on the first day of July, one thousand nine hundred ninety-seven, the rate shall be twelve percent; beginning on the first day of July, one thousand nine hundred ninety-eight, the rate shall be thirteen and one-half percent; and beginning on the first day of July, one thousand nine hundred ninety-nine and thereafter, the rate shall be fifteen percent; and beginning on the first day of July, two thousand and thereafter, the rate shall be sixteen percent .
(c) The benefit fund shall be the fund from which annuities shall be paid. Upon the retirement of a member, that member's accumulated contributions shall be transferred from the teachers accumulation fund to the benefit fund; the accumulated employers' contribution shall be transferred from the employers accumulation fund to the benefit fund; and annually a sum for prior service pension and disability credits, if needed, shall be transferred from the reserve fund to the benefit fund. Any deficit occurring in the benefit fund which is not automatically met by payments to that fund, as provided for by this article, shall be met by additional transfers from the employers accumulation fund and, if necessary, by transfers from the teachers accumulation fund.
(d) The retirement board is hereby authorized to accept gifts and bequests. All gifts, bequests and interest earnings from investments received by the board shall be deposited in the reserve fund. Any funds that may come into possession of the retirement system in this manner or which may be transferred from the teachers accumulation fund by reason of the lack of a claimant or because of a surplus in any of the funds, or any other moneys the disposition of which is not otherwise provided for, shall be credited to the reserve fund. The retirement board shall allow interest on the contributions in the teachers accumulation fund. Such interest shall be paid from the reserve fund and credited to the teachers accumulation fund. Any deficit occurring in any fund which would not be automatically covered by the payments to that fund as otherwise provided by this article shall be met by transfers from the reserve fund to such fund. In the reserve fund shall be accumulated moneys from retirement board appropriations to pay the accrued liabilities of the system, caused by the granting of prior service, ad hoc increases granted prior to the first day of July, one thousand nine hundred eighty, and disability pensions. Costs associated with board investments, such as premiums, accrued interest and commissions, shall be paid from the reserve fund.
(e) The expense fund shall be the fund from which shall be paid the expense incurred in the administration of the retirement system. The retirement board is herewith authorized to pay, from the expense fund, membership fees in such voluntary organizations as the national council on teacher retirement, anything in this code to the contrary notwithstanding. Interest on loans to members shall be deposited in the expense fund.
The retirement board is herewith given sole authority to direct and approve the making of any and all fund transfers as provided herein, anything in this code to the contrary notwithstanding.
§18-7A-25. Eligibility for retirement allowance.
Any member who has attained the age of sixty years or who has had thirty-five years of total service as a teacher in West Virginia, regardless of age, shall be eligible for an annuity. No new entrant nor present member shall be eligible for an annuity, however, if either has less than five years of service to his or her credit.
Any member who has attained the age of fifty-five years and who has served thirty years as a teacher in West Virginia shall be eligible for an annuity.
Any member who has served at least thirty but less than thirty-five years as a teacher in West Virginia and is less than fifty-five years of age shall be eligible for an annuity, but the same shall be the reduced actuarial equivalent of the annuity the member would have received if such member were age fifty-five at the time such annuity was applied for.
The request for any annuity shall be made by the member in writing to the retirement board, but in case of retirement for disability, the written request may be made by either the member or the employer.
A member shall be eligible for annuity for disability if he or she satisfies the conditions in either subdivision (a) or subdivision (b) of this section and meets the conditions of subdivision (c) of this section as follows:
(a) His or her service as a teacher in West Virginia must total at least ten years, and service as a teacher must have been terminated because of disability, which disability must have caused absence from service for at least six months before his or her application for disability annuity is approved.
(b) His or her service as a teacher in West Virginia must total at least five years, and service as a teacher must have been terminated because of disability, which disability must have caused absence from service for at least six months before his or her application for disability annuity is approved and said disability is a direct and total result of an act of student violence directed toward the member.
(c) An examination by a physician or physicians selected by the retirement board must show that the member is at the time mentally or physically incapacitated for service as a teacher, that for such service the disability is total and likely to be permanent, and that he or she should be retired in consequence thereof.
Continuance of the disability of the retired teacher shall be established by medical examination, as prescribed in the preceding paragraph, annually for five years after retirement, and thereafter at such times as the retirement board may require. Effective the first day of July, one thousand nine hundred ninety-eight, a member who has retired because of a disability may select an option of payment under the provisions of section twenty-eight of this article: Provided, That any option selected under the provisions of section twenty-eight of this article shall be in all respects the actuarial equivalent of the straight life annuity benefit the disability retiree receives or would receive if the options under section twenty-eight of this article were not available and that no beneficiary or beneficiaries of the disability annuitant may receive a greater benefit, nor receive any benefit for a greater length of time, than such beneficiary or beneficiaries would have received had the disability retiree not made any election of the options available under said section twenty-eight. In determining the actuarial equivalence, the board shall take into account the life expectancies of the member and the beneficiary: Provided, however, That the life expectancies may at the discretion of the board be established by an underwriting medical director of a competent insurance company offering annuities. Payment of the disability annuity provided in this article shall cease immediately if the retirement board finds that the disability of the retired teacher no longer exists, or if the retired teacher refuses to submit to medical examination as required by this section.
Effective the first day of July, two thousand two, and for three years thereafter, any member may retire with full pension rights, without reduction of benefits, who has attained the age of fifty years if the sum of the member's age plus years of contributing service equals or exceeds eighty. Any member who retires during this three-year period may not use sick leave as credit for years of contributing service. Any savings realized by the public school support plan under the provisions of article nine-a of this chapter, due to the retirement of members during this three-year period, shall be applied to the state teachers' retirement system.
ARTICLE 7B. TEACHERS' DEFINED CONTRIBUTION RETIREMENT SYSTEM.

 §18-7B-9. Members' contributions; annuity account established.
Each employee who is a member of the defined contribution system shall contribute four five and one-half percent of his or her gross compensation by salary reduction. Such salary reductions shall be made by the employer at the normal payroll intervals and shall be remitted within five working days to the private pension, insurance, annuity, mutual fund, or other qualified company or companies designated by the board to administer the day-to-day operations of the system.
All member contributions shall be immediately deposited to an account or accounts established in the name of the member and held in trust for the benefit of the member. An account agreement shall be issued to each member setting forth the terms and conditions under which contributions are received, and the investment and retirement options available to the member. The board shall promulgate by the thirtieth day of June, one thousand nine hundred ninety-one, pursuant to section six of this article, rules defining the minimum requirements for the investment and retirement options to be provided to the members.
The consolidated public employees retirement board shall study the feasibility of employees making personal contributions to the defined contribution system in addition to those required by this section and the impact of the United States Internal Revenue Code of one thousand nine hundred eighty-six, as amended, upon such contributions. The results of said study and recommendations for legislation to authorize such additional payments shall be presented to the committee on pensions and retirement of each house of the Legislature on or before the first day of October, one thousand nine hundred ninety-six.
Such rules, to the extent not inconsistent with the applicable provisions of the Internal Revenue Code of the United States, shall provide for varied retirement options including, but not limited to:
(1) Lump sum distributions;
(2) Joint and survivor annuities;
(3) Other annuity forms in the discretion of the board;
(4) Variable annuities which gradually increase monthly retirement payments: Provided, That said increased payments are funded solely by the existing current value of the member's account at the time the member's retirement payments commencement and not, to any extent, in a manner which would require additional employer or employee contributions to any member's account after retirement or after the cessation of employment; and
(5) The instances in which, if any, distributions or loans can be made to members from their annuity account balances prior to having attained the age of fifty-five.
§18-7B-10. Employer contributions.

Each participating employer shall annually make a contribution equal to seven eight and one-half percent of each member's gross compensation. The pro rata share of this amount shall be paid upon each date that a member contribution is made and shall be remitted as provided for in section nine of this article for credit to the member's annuity account. Each participating employer has a fiduciary duty to its employees to ensure that the employer contributions are timely made. In the case of an officer or employee of the state, any unpaid contribution shall be a state debt, contracted as a result of a casual deficit in state revenues, to be accorded preferred status over other expenditures.
In the event that any payment is not timely made, the participating employer shall immediately give to the employee and the state auditor notice in writing of the nonpayment, in such form and accompanied by such documentation as may be required by the auditor. Notice to the auditor shall operate in the manner of a requisition, and the auditor shall transmit a warrant to the treasurer. At such time as funds are available in the appropriate account, the treasurer shall pay the employer contribution, together with appropriate daily interest.
ARTICLE 7B. TEACHERS' DEFINED CONTRIBUTION RETIREMENT SYSTEM.

 §18-7B-19. Limiting participation in teachers' defined contribution
retirement system.
Beginning the first day of July, one thousand nine hundred ninety-nine, the state teachers' retirement system provided in article seven-a of this chapter is the single retirement program for all new employees whose employment commences on or after that date. No additional new employees may be admitted to the teachers' defined contribution retirement system. Members of the teachers' defined contribution retirement system, established in this article, whose employment continues beyond the first day of July, one thousand nine hundred ninety-nine, are not affected by this article and shall continue to contribute and participate in that system without change in provisions or benefits.
Notwithstanding the provisions of section twenty-three, article seven-a of this chapter, any employee whose employment terminates after the thirtieth day of June, one thousand nine hundred ninety-nine, who is later reemployed by an employer is eligible for membership only in the state teachers' retirement system: Provided, That if the reemployment with an existing employer occurs not more than six months after the employee's previous employment, he or she is entitled to readmission to the teachers' defined contribution retirement system in which he or she was originally a member: Provided, however, That if the employee has five or more years of credited service in the teachers' defined contribution retirement system, he or she is entitled to readmission into the teachers' defined contribution retirement system in which he or she was originally a member so long as he or she has not withdrawn his or her contributions from that retirement system: Provided further, That if the employee has withdrawn his or her contribution from the teachers' defined contribution retirement system, then readmission is not permitted and the employee is entitled only to the state teachers' retirement system.
An employee whose employment with an employer was suspended or terminated while he or she served as an officer with a statewide professional teaching association is eligible for readmission to the teachers' defined contribution retirement system in which he or she was a member. Any employee reemployed with an employer on or after the first day of July, one thousand nine hundred ninety-nine, who had five or more years credited service in the teachers' defined benefit retirement system may elect readmission to the teachers' defined benefit retirement system in which he or she was originally a member.
An employee whose employment with an employer or an existing employer is suspended as a result of an approved leave of absence, approved maternity or paternity break in service, or any other approved break in service authorized by the board, is eligible for readmission to the teachers' defined contribution retirement system in which he or she was a member.
In all cases where a question exists as to readmission to membership in the teachers' defined contribution retirement system, the board shall decide the question.
§18-9A-6a. Teachers retirement fund allowance; unfunded liability allowance.
(a) The total teachers retirement fund allowance shall be the sum of the basic foundation allowance for professional educators and the basic foundation allowance for service personnel, as provided in sections four and five of this article; all salary equity appropriations authorized in section five, article four of chapter eighteen-a; and such amounts as are to be paid by the counties pursuant to sections five-a and five-b of said article to the extent such county salary supplements are equal to the amount distributed for salary equity among the counties, multiplied by fifteen sixteen percent.
(b) The teachers retirement fund allowance amounts provided for in subsection (a) of this section shall be accumulated in the employers accumulation fund of the state teachers retirement system pursuant to section eighteen, article seven-a of this chapter, and shall be in lieu of the contribution required of employers pursuant to subsection (b) of said section as to all personnel included in the allowance for state aid in accordance with sections four and five of this article.
(c) In addition to the teachers retirement fund allowance provided for in subsection (a) of this section, there shall be an allowance for the reduction of any unfunded liability of the teachers retirement fund in accordance with the following provisions of this subsection. On or before the thirty-first day of December of each year, the actuary or actuarial firm employed in accordance with the provisions of section four, article ten-d, chapter five of this code shall submit a report to the president of the Senate and the speaker of the House of Delegates which sets forth an actuarial valuation of the teachers retirement fund as of the preceding thirtieth day of June. Each annual report shall recommend the actuary's best estimate, at that time, of the funding necessary to both eliminate the unfunded liability over a forty-year period beginning on the first day of July, one thousand nine hundred ninety-four, and to meet the cash flow requirements of the fund in fulfilling its future anticipated obligations to its members. In determining the amount of funding required, the actuary shall take into consideration all funding otherwise available to the fund for that year from any source: Provided, That the appropriation and allocation to the teachers' retirement fund made pursuant to the provisions of section six-b of this article shall not be included in the determination of the requisite funding amount. In any year in which the actuary determines that the teachers retirement fund is not being funded in such a manner, the allowance made for the unfunded liability for the next fiscal year shall be not less than the amount of the actuary's best estimate of the amount necessary to conform to the funding requirements set forth in this subsection.
§18-9A-6b. Allocation of growth of local share.

Beginning with the first day of July, one thousand nine hundred ninety-five, and thereafter, an appropriation and allocation due to the increase in local share not to exceed seven three million dollars above that computed for the previous year, which increase may be attributable to any increase in the tax rate as enacted by the Legislature in accordance with the provisions of subsection (b), section six-f, article eight, chapter eleven of this code, shall be allocated to the state teachers retirement system, which appropriation and allocation shall be used to reduce in addition to the amounts required by section six-a of this article or any other retirement contributions as may be required to the state teachers retirement system set forth in article seven-a of this chapter and which shall be accumulated in the employers accumulation fund created in section eighteen of said article seven-a.