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PA Bulletin, Doc. No. 03-266

PROPOSED RULEMAKING

PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD

[22 PA. CODE CH. 215]

Optional Alternate Retirement Plans

[33 Pa.B. 882]

   The Public School Employees' Retirement Board (Board) proposes to amend Chapter 215 (relating to general administration) to read as set forth in Annex A. The rulemaking proposes to delete the transitional provisions for electing to participate in an optional alternate retirement plan in § 215.36 (relating to optional alternate retirement programs). The transitional provisions are no longer needed and, read broadly, may conflict with 24 Pa.C.S. Part IV (relating to Public School Employees' Retirement Code) (Retirement Code), because the Retirement Code does not allow current members to opt out of the system.

A.  Effective Date

   This proposed rulemaking will go into effect upon publication in the Pennsylvania Bulletin as a final-form rulemaking.

B.  Contact Person

   For further information, contact Frank Ryder, Director of Government Relations, Public School Employees' Retirement System, 5 North Fifth Street, P. O. Box 125, Harrisburg, PA 17108, (717) 720-4733; or Charles K. Serine, Deputy Chief Counsel, Public School Employees' Retirement System, 5 North Fifth Street, P. O. Box 125, Harrisburg, PA 17108, (717) 720-4679.

C.  Statutory Authority

   This proposed rulemaking is being made under the authority of the Retirement Code.

D.  Background and Purpose

   When it was amended in 1975, the Retirement Code, for the first time, permitted certain school employees to choose an alternate retirement plan. The Retirement Code applies to new employees. The Board promulgated § 215.36 to implement this Retirement Code provision. Section 215.36, among other things, contained a transitional provision granting existing employees an opportunity to elect an alternate retirement plan. This transitional provision was added because the existing employees never had the opportunity to select an alternate plan. At the time of enactment of § 215.36, the only alternate plan allowed was the Teachers Insurance and Annuity Association--College Retirement Equities Fund.

   The act of June 22, 2001 (P. L. 530, No. 35) allowed the State System of Higher Education (SSHE) to add insurance companies or mutual funds as additional alternate plans for its employees. Section 215.36, as written, could be interpreted to allow existing employees, who already had a choice under the Retirement Code to elect an alternate retirement plan, to make an additional election and to opt out of the Public School Employees' Retirement System (PSERS) each time a new alternate plan is approved by SSHE. The Board, however, has always interpreted § 215.36 as providing a one-time opportunity for these employees, not a continual choice each time a new alternate plan is approved by the employer. Deleting the language clarifies the intent of the Board and eliminates a potential conflict between § 215.36 and the Retirement Code, because the Retirement Code does not allow current members to opt out of the system.

   The State Employees' Retirement System (SERS) is proposing a similar revision of its regulation that parallels § 215.36. This repeal will harmonize the regulations of PSERS and SERS with regard to election of alternate retirement plans. SSHE supports the amendment and repeal of these sections.

E.  Benefits, Costs and Compliance

Benefits

   This proposed rulemaking removes an expired transitional provision, clarifies the Board's intent regarding the election of alternate retirement plans and eliminates a potential conflict between the Retirement Code and § 215.36.

Costs

   The proposed rulemaking will formalize the Board's long-standing interpretation that the transitional provisions of § 215.36 have expired. The proposed rulemaking, therefore, maintains the status quo and has no associated cost to the Commonwealth, its citizens, school employers, school employees or PSERS.

Compliance Costs

   The proposed rulemaking will not impose any additional compliance costs on school employees or employers.

F.  Sunset Review

   Not applicable.

G.  Regulatory Review

   Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on January 31, 2003, the Board submitted a copy of this proposed rulemaking to the Independent Regulatory Review Commission (IRRC) and the Chairpersons of the House Education Committee and the Senate Finance Committee. In addition to submitting the proposed rulemaking, the Board has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the PSERS. A copy of this material is available to the public upon request.

   Under section 5(g) of the Regulatory Review Act, if IRRC has objections to any portion of the proposed rulemaking, it will notify the Board within 10 days of the close of the Committees' review period. The notification shall specify the regulatory review criteria that have not been met by the portion of the proposed rulemaking to which an objection is made. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the rulemaking, by the Board, the General Assembly and the Governor of objections raised.

H.  Public Comments

   Written Comments. Interested persons are invited to submit comments, suggestions or objections regarding the proposed rulemaking to the Public School Employees' Retirement System, 5 North Fifth Street, P. O. Box 125, Harrisburg, PA 17108-0125. Comments submitted by facsimile will not be accepted. Comments, suggestions or objections must be received by the Board March 17, 2003 (within 30 days of publication in the Pennsylvania Bulletin). Interested persons may also submit a summary of their comments to the Board. The summary may not exceed one page in length and must be received by March 7, 2003 (within 20 days following publication in the Pennsylvania Bulletin). The one-page summary will be provided to each member of the Board in the agenda packet distributed prior to the meeting at which the final regulation will be considered.

   Electronic Comments. Comments may also be submitted electronically to the Board at fryder@state.pa.us and must also be received by the Board by March 7, 2003. A subject heading of the proposal and a return name and address must be included in each transmission. If an acknowledgment of electronic comments is not received by the sender within 2 working days, the comments should be transmitted by mail to ensure receipt.

DALE H. EVERHART,   
Secretary

   Fiscal Note:  43-9. No fiscal impact; (8) recommends adoption.

Annex A

TITLE 22.  EDUCATION

PART XIII.  PUBLIC SCHOOL EMPLOYEES' RETIREMENT BOARD

CHAPTER 215.  GENERAL ADMINISTRATION

MISCELLANEOUS PROVISIONS

§ 215.36.  Optional alternate retirement programs.

   (a)  Under section 8301(a)(1) of the Retirement Code (relating to mandatory and optional membership), certain school [employes] employees may elect not to join the System[, or to depart from it] in favor of an optional alternate retirement program approved by the employer[, such as the Secretary of Education or the governing body of certain State institutions, including Pennsylvania State University, as the case may be]. Therefore, the following paragraphs are adopted by the Board to establish guidelines and procedures, insofar as the Board is authorized to so do, with respect to implementing such a program for certain eligible school [employes] employees:

   (1)  [Section 8301(a)(1) of the Retirement Code (relating to eligibility points for retention and reinstatement of source credits) purports to authorize the existence of an optional alternate retirement program under the responsibility of the employer.

   (2)  Employes, including those employed on the effective date of the establishment of an optional alternate retirement program, who are eligible for membership therein, and who are active members of the System, have the option of continuing their active membership or of joining the optional alternate retirement program if they make the election within 9 months of the effective date of the establishment of the optional alternate retirement program]. Every [employe] employee who [subsequently becomes] is eligible for membership in the optional alternate retirement program shall make the election within 30 days of the first date of active employment. [Employes] Employees not exercising the option to join the optional alternate retirement program shall be deemed to have chosen to commence [or continue] active membership in the System, unless they have elected membership in the State [Employes'] Employees' Retirement System, as otherwise provided by law.

   [(3)  When an eligible employe, who is an active member of the System, elects to participate in the optional alternate retirement program in accordance with paragraph (2), the employe may elect to withdraw the accumulated deductions from the fund as of the date of the election; or, if the employe is eligible for vesting in accordance with the Retirement Code, the employe may elect to leave the accumulated deductions credited to account of the employe in the Fund and receive a retirement allowance from the System upon separation from employment; or, at the employe's option, upon attainment of superannuation retirement age, if later. The retirement allowance shall be based upon credited service and final average salary while a contributing member to this System only.

   (4)  Notwithstanding provisions to the contrary, an eligible employe employed on the effective date of the establishment of the optional alternate retirement program, who is eligible for membership therein, who is an active member of the System, and who is not vested in the retirement system, has the option of joining the optional alternate retirement program within 60 days of the date upon which the employe becomes eligible for vesting in accordance with the applicable provisions of the Retirement Code, in which case the employe may vest and join the optional alternate retirement program under the same conditions as provided in paragraph (3).

   (5)] (2)  When an eligible [employe elects] employee elected to participate in the optional alternate retirement program in accordance with paragraph (2) as it existed on _____ (Editor's Note:  The blank refers to a date 1 day before the effective date of adoption of this proposal.) or paragraph (4) as it existed on _____ (Editor's Note:  The blank refers to a date 1 day before the effective date of adoption of this proposal.) or elects to participate in the optional alternate retirement program in accordance with paragraph (2), the election is final and binding so long as the [employe shall] employee remains eligible to remain in the optional alternate retirement program. When an [employe] employee later is employed in a capacity which does not qualify for membership in the optional alternate retirement program, the [employe] employee shall, upon meeting the qualifications for membership in the System, [resume making] make contributions to the fund or reinstate the former credited service for which contributions had been withdrawn, as the case may be, in accordance with the applicable provisions of the Retirement Code. Service, salary or other compensation paid to an [employe] employee while a member of the optional alternate retirement program will not be credited toward membership in, or retirement benefit from, the System.

   [(6)  For employes who elect to join the optional alternate retirement program, the contribution of the Commonwealth to the optional alternate retirement program on behalf of the employes will be no more than 1/2 of the employer normal contribution rate and accrued liability rate as determined in accordance with section 8328(b) and (c) of the Retirement Code (relating to actuarial cost method).]

   (b)  Retirement Code reference: Section [8301] 8326 of the Retirement Code.

[Pa.B. Doc. No. 03-266. Filed for public inspection February 14, 2003, 9:00 a.m.]



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