COMMITTEE SUBSTITUTE

FOR

Senate Bill No. 545

(By Senator Green)

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[Originating in the Committee on Pensions;

reported February 21, 2012.]

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A BILL to amend and reenact §5-10-17, §5-10-19 and §5-10-48 of the Code of West Virginia, 1931, as amended, all relating to reemployment after retirement from the Public Employees Retirement System; employer reporting requirements; authorization for the Legislative Auditor to audit all participating public employers; and directing the Consolidated Public Retirement Board to study efficient and effective ways to improve compliance with the provisions of this section and report to the Legislature.

Be it enacted by the Legislature of West Virginia:

    That §5-10-17, §5-10-19 and §5-10-48 of the Code of West Virginia, 1931, as amended, be amended and reenacted, all to read as follows:

ARTICLE 10. WEST VIRGINIA PUBLIC EMPLOYEES RETIREMENT ACT.

§5-10-17. Retirement system membership.

    The membership of the retirement system consists of the following persons:

     (a) All employees, as defined in section two of this article, who are in the employ of a political subdivision the day preceding the date it becomes a participating public employer and who continue in the employ of the participating public employer on and after that date shall become members of the retirement system; and all persons who become employees of a participating public employer on or after that date shall thereupon become members of the system; except as provided in subdivisions (b) and (c) of this section.

    (b) The membership of the Public Employees Retirement System shall not include any person who is an active contributing member of, or who has been retired by, any of the state Teachers retirement systems, the Judges Retirement System, any Retirement System of the West Virginia State Police, the Deputy Sheriff Retirement System or any municipal retirement system for either, or both, police or firefighter; and the Bureau of Employment Programs, by the Commissioner of the Bureau, may elect whether its employees will accept coverage under this article or be covered under the authorization of a separate enactment: Provided, That the exclusions of membership do not apply to any member of the State Legislature, the Clerk of the House of Delegates, the Clerk of the state Senate or to any member of the legislative body of any political subdivision provided he or she once becomes a contributing member of the retirement system: Provided, however, That any retired member of the State Police Death, Disability and Retirement Fund, the West Virginia State Police Retirement System, the Deputy Sheriff Retirement System and any retired member of any municipal retirement system for either, or both, police or firefighter may on and after the effective date of this section become a member of the retirement system as provided in this article, without receiving credit for prior service as a municipal police officer or firefighter or as a member of the State Police Death, Disability and Retirement Fund, the West Virginia State Police Retirement System or the Deputy Sheriff Retirement System: Provided further, That any retired member of the State Police Death, Disability and Retirement Fund, the West Virginia State Police Retirement System, the Deputy Sheriff Retirement System and any retired member of any municipal retirement system for either, or both, police or firefighters, who begins participation in the retirement system established in this article on or after July 1, 2005, may not receive a combined retirement benefit in excess of one hundred five percent of the member’s highest annual salary earned while either a member of the retirement system established in this article or while a member of the other retirement system or systems from which he or she previously retired when adding the retirement benefit from the retirement system created in this article to the retirement benefit received by that member from the other retirement system or systems set forth herein from which he or she previously retired: And provided further, That the membership of the retirement system does not include any person who becomes employed by the Prestera Center for Mental Health Services, Valley Comprehensive Mental Health Center, Westbrook Health Services or Eastern Panhandle Mental Health Center on or after July 1, 1997: And provided further, That membership of the retirement system does not include any person who becomes a member of the federal railroad retirement act on or after July 1, 2000.

    (c) Any member of the State Legislature, the Clerk of the House of Delegates, the Clerk of the state Senate and any employee of the State Legislature whose employment is otherwise classified as temporary and who is employed to perform services required by the Legislature for its regular sessions or during the interim between regular sessions and who has been or is employed during regular sessions or during the interim between sessions in seven consecutive calendar years, as certified by the Clerk of the House in which the employee served, or any member of the legislative body of any other political subdivision shall become a member of the retirement system provided he or she notifies the retirement system in writing of his or her intention to be a member of the system and files a membership enrollment form as prescribed by the board of Trustees, and each person, upon filing his or her written notice to participate in the retirement system, shall by that act authorize the Clerk of the House of Delegates or the Clerk of the state Senate or such person or legislative agency as the legislative body of any other political subdivision shall designate to deduct the member’s contribution, as provided in subsection (b), section twenty-nine of this article, and after the deductions have been made from the member’s compensation, the deductions shall be forwarded to the retirement system.

    (d) If question arises regarding the membership status of any employee, the board of Trustees has the final power to decide the question.

    (e) Any individual who is a leased employee is not eligible to participate in the system. For the purposes of this article, the term “leased employee” means any individual who performs services as an independent contractor or pursuant to an agreement with an employee leasing organization or as an employee of a contracting partnership, company, corporation or other similar organization. If a question arises regarding the status of an individual as a leased employee, the board has final authority to decide the question.

§5-10-19. Employers to file information as to employees' service.

    Each participating public employer shall file with the board of trustees, in such form as the board shall from time to time prescribe, a detailed statement of all service rendered to participating public employers by each of its employees and by any retirant who retired under section twenty-two-c of this article and who is working for the employer on a contract basis, as defined in section twenty-two-c of this article, and such other information as the board shall require in the operation of the retirement system: Provided, That on and after July 1, 2012, all participating public employers shall file with the board a detailed statement of all services rendered to the employer by all retirants who are working for the participating public employer on a contract basis or working for an employer, company, corporation, partnership or other legal entity that is working for the participating public employer on a contract basis. The Board shall determine how often these reports will be filed and any other information needed, including but not limited to the amount of all payments made by the participating public employer to the retirant directly or to the retirant’s employer.

§5-10-48. Reemployment after retirement; options for holder of elected public office.

    (a) The Legislature finds that a compelling state interest exists in maintaining an actuarially sound retirement system and that this interest necessitates that certain limitations be placed upon an individual's ability to retire from the system and to then later return to state employment as an employee with a participating public employer while contemporaneously drawing an annuity from the system. The Legislature hereby further finds and declares that the interests of the public are served when persons having retired from public employment are permitted, within certain limitations, to render post-retirement employment in positions of public service, either in elected or appointed capacities. The Legislature further finds and declares that it has the need for qualified employees and that in many cases an employee of the Legislature will retire and be available to return to work for the Legislature as a per diem employee. The Legislature further finds and declares that in many instances these employees have particularly valuable expertise which the Legislature cannot find elsewhere. The Legislature further finds and declares that reemploying these persons on a limited per diem basis after they have retired is not only in the best interests of this state, but has no adverse effect whatsoever upon the actuarial soundness of this particular retirement system.

    (b) For the purposes of this section: (1) “Regularly employed on a full-time basis” means employment of an individual by a participating public employer, in a position other than as an elected or appointed public official, which normally requires twelve months per year service and at least one thousand forty hours of service per year in that position; (2) “temporary full-time employment or temporary part-time employment” means employment of an individual on a temporary or provisional basis by a participating public employer, other than as an elected or appointed public official, in a position which does not otherwise render the individual as regularly employed; (3) “former employee of the Legislature” means any person who has retired from employment with the Legislature and who has at least ten years' contributing service with the Legislature; and (4) “reemployed by the Legislature” means a former employee of the Legislature who has been reemployed on a per diem basis not to exceed one hundred seventy-five days per calendar year.

    (c) (1) In the event a retirant becomes regularly employed on a full-time or part-time basis by a participating public employer, payment of his or her annuity shall be suspended during the period of his or her reemployment and he or she shall become a contributing member to the retirement system. If his or her reemployment is for a period of one year or longer, his or her annuity shall be recalculated and he or she shall be granted an increased annuity due to the additional employment, the annuity to be computed according to section twenty-two of this article. A retirant may accept temporary full-time or temporary part-time or permanent part-time employment from a participating employer without suspending his or her retirement annuity so long as he or she does not receive annual compensation in excess of $15,000: Provided, That a retirant may be employed by the Legislature on a per diem basis without suspension of the retirement annuity if the retirant's annual compensation from the Legislature does not exceed $20,000.

    (2) The Legislature finds that currently there are insufficient provisions to assure compliance with requirements of this section. The Legislature further finds that, to facilitate compliance, cooperation is required among the State Auditor, the Consolidated Public Retirement Board, the state divisions of purchasing and personnel, participating public employers and contractors providing services to the participating public employers.

    (3) The board is authorized to and shall gather and compare information from the State Auditor, the state divisions of purchasing and personnel, participating public employers and contractors providing services to participating employers with information in the board’s data base to identify those retirants from the Public Employees Retirement System receiving a PERS annuity while receiving payments from a participating public employer, whether as a permanent full-time or part-time employee, a temporary full-time or part-time employee, a contractor or person doing work directly for the participating public employer as an employee of a contractor or contracting organization. If payment is made to a corporation, partnership or entity by which an individual is “doing business as” a name other than the proprietor, the board shall seek information sufficient to determine the amount of any of the payments inuring to the benefit of any retirant providing services to the participating public employer. The board may, in its discretion, on the issue of whether a person is a contractor or an employee, request a determination from the United States Internal Revenue Service. Issuance of an IRS Form 1099 by the participating public employer is not conclusive evidence that the receiver of payment is an independent contractor and not an employee. Upon reasonable belief that a retirant is in violation of this section, the board shall give notice of intent to suspend benefits based on the retirant’s ineligibility to receive benefits. The Board may suspend a retirant’s benefits if the retirant either waives the right to an administrative hearing or fails to respond to the notice within forty days after service. The retirant may appeal the decision pursuant to the board’s procedures established for hearing contested cases under article five, chapter twenty-nine-a of this code.

    (4) The Legislative Auditor is authorized to audit all participating public employers for the purpose of ensuring compliance with provisions of this section.

    (5) As a condition of a contract, any contractor providing services to a participating employer shall provide to the employer the name and social security number of each person performing work under the contract, the amount paid to the person and the person’s job description.

    (6) The State Auditor shall monthly forward to the Consolidated Public Retirement Board information on all persons who are receiving payment as an employee, or leased employee as defined in subsection (e), section seventeen of this article. The information shall include the name and address of the person or entity receiving payment, the amount of money paid to the person, the entity making the payment, the contract number under which payment is made if applicable, and the time payment was made. The State Auditor shall make this same information available to the public on a regular basis.

    (7) The board shall study efficient and effective ways to improve compliance with the provisions of this section and shall report its findings, conclusions and recommendations, together with drafts of any legislation necessary to effectuate its recommendations, to the Legislature’s Joint Committee on Pensions and Retirement by October 31, 2012, and shall report the board’s study results to the regular session of the Legislature, 2013.

    (d) In the event a member retires and is then subsequently elected to a public office or is subsequently appointed to hold an elected public office, or is a former employee of the Legislature who has been reemployed by the Legislature, he or she has the option, notwithstanding subsection (c) of this section, to either:

    (1) Continue to receive payment of his or her annuity while holding public office or during any reemployment of a former employee of the Legislature on a per diem basis, in addition to the salary he or she may be entitled to as an office holder or as a per diem reemployed former employee of the Legislature; or

    (2) Suspend the payment of his or her annuity and become a contributing member of the retirement system as provided in subsection (c) of this section. Notwithstanding the provisions of this subsection, a member who is participating in the system as an elected public official may not retire from his or her elected position and commence to receive an annuity from the system and then be elected or reappointed to the same position unless and until a continuous twelve-month period has passed since his or her retirement from the position: Provided, That a former employee of the Legislature may not be reemployed by the Legislature on a per diem basis until at least sixty days after the employee has retired: Provided, however, That the limitation on compensation provided by subsection (c) of this section does not apply to the reemployed former employee: Provided further, That in no event may reemployment by the Legislature of a per diem employee exceed one hundred seventy-five days per calendar year.

    (e) A member who is participating in the system simultaneously as both a regular, full-time employee of a participating public employer and as an elected or appointed member of the legislative body of the state or any political subdivision may, upon meeting the age and service requirements of this article, elect to retire from his or her regular full-time state employment and may commence to receive an annuity from the system without terminating his or her position as a member of the legislative body of the state or political subdivision: Provided, That the retired member shall not, during the term of his or her retirement and continued service as a member of the legislative body of a political subdivision, be eligible to continue his or her participation as a contributing member of the system and shall not continue to accrue any additional service credit or benefits in the system related to the continued service.

    (f) Notwithstanding the provisions of section twenty-seven-b of this article, any publicly elected member of the legislative body of any political subdivision or of the State Legislature, the clerk of the House of Delegates and the clerk of the Senate may elect to commence receiving in-service retirement distributions from this system upon attaining the age of seventy and one-half years: Provided, That the member is eligible to retire under the provisions of section twenty or twenty-one of this article: Provided, however, That the member elects to stop actively contributing to the system while receiving the in-service distributions.

    (g) The provisions of section twenty-two-h of this article are not applicable to the amendments made to this section during the 2006 Regular Session.

    NOTE: The purpose of this bill is to facilitate assurance of compliance with statutory requirements which, under certain circumstances, limit earnings of a PERS retirant in post-retirement employment.

    The bill requires cooperation and information sharing among the State Auditor, the Consolidated Public Retirement Board, agencies in the state Department of Administration, employers participating in the Public Employees Retirement System and contractors providing services to the state and other participating public employers.

    Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.