WSR 11-15-050

PROPOSED RULES

STATE BOARD FOR COMMUNITY

AND TECHNICAL COLLEGES

[ Filed July 15, 2011, 11:40 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 11-12-084.

Title of Rule and Other Identifying Information: WAC 131-16-010 through and including WAC 131-06-066 governing the Washington state board for community and technical colleges retirement plan. Rule changes are required due to legislation (ESHB 1981) adopted during the 2011 session of the legislature.

Hearing Location(s): State Board for Community and Technical Colleges, 3101 Northup Way, Bellevue, WA 98004-1449, on September 14, 2011, at 8:00 a.m.

Date of Intended Adoption: September 14, 2011.

Submit Written Comments to: John Boesenberg, 1300 Quince Street S.E., Olympia, WA 98504, e-mail jboesenberg@sbctc.edu, fax (360) 704-4415, by September 1, 2011.

Assistance for Persons with Disabilities: Contact DelRae Oderman by September 1, 2011, TTY (360) 704-4309 or fax (360) 704-4415.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposed rule changes are required to comply with state law revisions resulting from the 2011 legislature's adoption of ESHB 1981. The proposals eliminate supplemental benefits for participants establishing plan eligibility on or after July 1, 2011; prohibit retirees of plans administered by the department of retirement systems from participating in the state board retirement plan; and provide eligible employees with retirement plan options thirty days to make their election.

Reasons Supporting Proposal: Compliance with newly adopted state law.

Statutory Authority for Adoption: RCW 28B.50.400.

Statute Being Implemented: RCW 28B.50.400.

Rule is not necessitated by federal law, federal or state court decision.

Name of Proponent: Washington state board for community and technical colleges, governmental.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: John Boesenberg, 1300 Quince Street S.E., Olympia, WA 98504, (360) 704-4303.

No small business economic impact statement has been prepared under chapter 19.85 RCW. No impact.

A cost-benefit analysis is not required under RCW 34.05.328. State board is not a listed agency under RCW 34.05.328 and is therefore exempt from the provision.

July 15, 2011

DelRae Oderman

Executive Assistant

OTS-4121.1


AMENDATORY SECTION(Amending WSR 10-22-073, filed 10/29/10, effective 11/29/10)

WAC 131-16-011   Definitions.   For the purpose of WAC 131-16-010 through 131-16-066, the following definitions shall apply:

(1) "Participant" means any employee who is eligible to participate in the plan ((and who, as a condition of employment, on and after January 1, 1997, shall participate in the plan upon initial eligibility)).

(2) "Supplemental retirement benefit" means payments, as calculated in accordance with WAC 131-16-061, to an eligible retired participant in the plan prior to July 1, 2011, or designated beneficiary whose retirement benefits provided by the plan do not attain the level of the retirement benefit goal established by WAC 131-16-015.

(3) "Year of full-time service" means retirement credit based on full-time employment or the equivalent thereof based on part-time employment in an eligible position for a period of not less than five months in any fiscal year during which contributions to TIAA-CREF were made by both the participant and a participating employer or a Washington public higher education institution or any year or fractional year of prior service in a Washington public retirement system while employed at a participating employer or a Washington public higher education institution: Provided, That the participant will receive a pension benefit from such other retirement system and that not more than one year of full-time service will be credited for service in any one fiscal year.

(4) "Fiscal year" means the period beginning on July 1 of any calendar year and ending on June 30 of the succeeding calendar year.

(5) "Average annual salary" means the amount derived when the salary received during the two consecutive highest salaried fiscal years of full-time service for which contributions to TIAA-CREF were made by both the participant and a participating employer or a Washington public higher education institution is divided by two.

(6) "Plan retirement benefit" means the amount of annual retirement income derived from a participant's accumulated balances including dividends at the time of retirement: Provided, That solely for the purpose of calculating a potential supplemental retirement benefit, such amount shall be adjusted to meet the assumptions set forth in WAC 131-16-061(2).

(7) "Salary" means all remuneration received by the participant from the participating employer, including summer quarter compensation, extra duty pay, leave stipends, and grants made by or through the participating employer; but not including any severance pay, early retirement incentive payment, remuneration for unused sick or personal leave, or remuneration for unused annual or vacation leave in excess of the amount payable for thirty days or two hundred forty hours of service.

(8) "Designated beneficiary" means the surviving spouse of the retiree or, with the consent of such spouse, if any, such other person or persons as shall have an insurable interest in the retiree's life and shall have been nominated by written designation duly executed and filed with the retiree's participating employer.

(9) "State board" means the state board for community and technical colleges as created in RCW 28B.50.050.

(10) "Appointing authority" means a participating employer's governing board or the designees of such boards.

(11) "Plan" means the retirement plan sponsored by the state board and funded by TIAA-CREF.

(12) "Participating employer" means an educational organization or agency operated by the state of Washington which is the employer of one or more eligible employees or former eligible employees and which is an employing entity designated by the state board to participate in the plan. The participating employers are listed in Appendix A of the plan document.

[Statutory Authority: RCW 28B.10.400. 10-22-073, 131-16-011, filed 10/29/10, effective 11/29/10; 05-24-051, 131-16-011, filed 12/1/05, effective 1/1/06. Statutory Authority: RCW 28B.10.400 and chapter 28B.50 RCW. 98-14-033, 131-16-011, filed 6/23/98, effective 7/24/98. Statutory Authority: Chapter 28B.50 RCW. 97-10-069, 131-16-011, filed 5/5/97, effective 7/8/97. Statutory Authority: RCW 28B.10.400. 91-13-048 (Resolution No. 91-20, Order 129), 131-16-011, filed 6/14/91, effective 7/15/91. Statutory Authority: RCW 28B.10.400(3). 86-22-027 (Order 111, Resolution No. 86-43), 131-16-011, filed 10/30/86. Statutory Authority: RCW 28B.10.400. 83-20-042 (Order 95, Resolution No. 83-25), 131-16-011, filed 9/28/83. Statutory Authority: RCW 28B.10.400(3). 82-11-014 (Order 91, Resolution No. 82-6), 131-16-011, filed 5/10/82. Statutory Authority: RCW 28B.10.400. 79-12-069 (Order 80, Resolution No. 79-44), 131-16-011, filed 11/30/79; Order 28, 131-16-011, filed 7/1/74.]


AMENDATORY SECTION(Amending WSR 05-24-051, filed 12/1/05, effective 1/1/06)

WAC 131-16-015   Retirement benefit goal established.   A retirement benefit goal is established for use in calculating eligibility for a supplemental benefit. Subject to the provisions of WAC 131-16-061, the retirement benefit goal for participants in the plan prior to July 1, 2011, is to provide participants at age sixty-five having twenty-five years of full-time service a minimum annual retirement income, exclusive of Federal Old Age Survivors Insurance benefits, equivalent to fifty percent of their average annual salary.

[Statutory Authority: RCW 28B.10.400. 05-24-051, 131-16-015, filed 12/1/05, effective 1/1/06; 91-13-048 (Resolution No. 91-20, Order 129), 131-16-015, filed 6/14/91, effective 7/15/91. Statutory Authority: RCW 28B.10.400(3). 82-11-014 (Order 91, Resolution No. 82-6), 131-16-015, filed 5/10/82; Order 28, 131-16-015, filed 7/1/74.]


AMENDATORY SECTION(Amending WSR 10-22-073, filed 10/29/10, effective 11/29/10)

WAC 131-16-021   Employees eligible to participate in the retirement plan.   (1) Eligibility to participate in the plan is limited to persons who hold appointments to participating employer staff positions as full-time or part-time faculty members, administrators or professional staff exempt from the provisions of chapter 41.06 RCW and, effective July 1, 1999, are assigned a cumulative total of at least fifty percent of a full-time workload as defined by the collective bargaining agreement and/or the appointing authority at one or more participating employers for at least two consecutive college quarters or its equivalent. (Part-time faculty workload is calculated in accordance with RCW 28B.50.489 and 28B.50.4891.) Effective July 1, 2011, otherwise eligible employees who have retired or are eligible to retire from a public employees' retirement system listed in RCW 41.50.030 are prohibited from participation in the plan.

(2) Participation in the plan is also permitted for current and former employees of participating employers who are on leave of absence or who have terminated employment by reason of permanent disability and who are receiving a salary continuation insurance benefit through a plan made available by the state of Washington: Provided, That such noncontributory participation shall not be creditable toward the number of years of full-time service utilized in calculating eligibility for supplemental retirement benefits pursuant to WAC 131-16-061.

(3) Optional participation in tax-deferred annuities other than this qualified plan as offered by participating employers is permitted consistent with the Internal Revenue Code: Provided, That the provisions of WAC 131-16-015, 131-16-050, and 131-16-061 shall not apply in such cases. Optional tax-deferred annuities are provided through a salary reduction agreement between the employee and employer. There is no employer contribution for optional tax-deferred annuities.

(4) An employee who moves from an ineligible to an eligible position for the same appointing authority may become a participant by so electing in writing within ((six months)) thirty days following such move.

(5) A participant who moves from an eligible position to a classified position for the same appointing authority may continue to be a participant by so electing within ((six months)) thirty days following such move.

(6) As specified in RCW 28B.10.400, participation in the plan by employees of the higher education coordinating board is limited to eligible employees who have contributed premiums to a similar qualified plan and who are not receiving or accruing a retirement allowance under Title 41 RCW or chapter 43.43 RCW.

(7) Participants shall continue participation regardless of the proportion of full-time duties assigned, except as otherwise provided in this section, as long as continuously employed by a participating employer. The participating employer shall notify, in writing, all newly hired employees of their potential right to participate. A participating employee, who changes employers without a break in service, shall have the responsibility to notify in writing the new participating employer of his or her eligibility. In no case will there be a requirement for retroactive contributions if an employee fails to inform his or her participating employer about eligibility previously established with another participating employer. For the purposes of determining eligibility, spring and fall quarters shall be considered as consecutive periods of employment.

(((8) As a condition of employment, all employees who become eligible on and after January 1, 1997, shall participate in this plan upon initial eligibility. Notwithstanding this provision, all eligible new employees who at the time of employment are members of the Washington state teachers retirement system or the Washington public employees retirement system may participate as provided in WAC 131-16-031.))

[Statutory Authority: RCW 28B.10.400. 10-22-073, 131-16-021, filed 10/29/10, effective 11/29/10; 05-24-051, 131-16-021, filed 12/1/05, effective 1/1/06. Statutory Authority: Chapter 28B.50 RCW. 00-14-017, 131-16-021, filed 6/28/00, effective 7/29/00; 99-22-052, 131-16-021, filed 10/29/99, effective 11/29/99; 99-19-100, 131-16-021, filed 9/20/99, effective 10/21/99. Statutory Authority: RCW 28B.10.400 and chapter 28B.50 RCW. 98-14-033, 131-16-021, filed 6/23/98, effective 7/24/98. Statutory Authority: Chapter 28B.50 RCW. 97-10-069, 131-16-021, filed 5/5/97, effective 7/8/97. Statutory Authority: RCW 28B.10.400. 91-13-048 (Resolution No. 91-20, Order 129), 131-16-021, filed 6/14/91, effective 7/15/91.]


AMENDATORY SECTION(Amending WSR 10-22-073, filed 10/29/10, effective 11/29/10)

WAC 131-16-031   Participation in the plan.   (1) Except as provided in this chapter, participation in the plan is required of all otherwise eligible new employees((: Provided, That)), provided that:

(a) Any such new employee, who at the time of employment is a member of the Washington state teachers retirement system (TRS) or the Washington public employees retirement system (PERS), and whose employment meets the requirements of an "eligible position" as defined by such plan, may irrevocably elect to retain such membership ((or, if not vested in that system, retain membership until vesting occurs and then irrevocably elect to participate in the plan)) within thirty days of meeting the plans eligibility criteria. Failure to make an election after thirty days will result in such new employee being placed into the state board retirement plan.

(b) Any such new employee, not already a member of TRS or PERS, may irrevocably elect to establish membership in TRS Plan 3 or PERS Plan 3 provided the employee's position meets the requirements of an "eligible position" as defined by such plan. Failure to make an election after thirty days will result in such new employee being placed into the state board retirement plan.

(2) Employees who establish plan eligibility in accordance with WAC 131-16-021 and who, through concurrent employment with another employer, are active Washington public employee retirement system (PERS) members are required to so advise the participating employer and shall be given the following options:

(a) To participate in the state board retirement plan in accordance with chapter 131-16 WAC, forgoing active PERS membership (contributions and service credit) with their other employer; or

(b) To continue active participation in PERS based upon their employment with the other public employer; forgoing participation in the state board retirement plan.

Failure to make an election within thirty days of notification results in the employee being placed in the plan. The participating employer is required to advise the department of retirement systems (DRS) of a PERS member's participation in the plan, whether through election or default. It shall be the employee's responsibility to notify the other employer if he or she elects to participate in the plan. The employee will notify his or her participating employer should the employee cease to be an active PERS member. This irrevocable election remains in effect as long as the employee is actively participating in a PERS plan and is required because RCW 41.40.023(4) prohibits PERS members from simultaneously participating in two state retirement plans.

(3) Any current active participant of the plan who becomes an active member of PERS based on employment with another PERS employer is required to notify his or her participating employer. The employee will be provided the options listed in subsection (2) of this section and the participating employer will follow through accordingly.

[Statutory Authority: RCW 28B.10.400. 10-22-073, 131-16-031, filed 10/29/10, effective 11/29/10; 05-24-051, 131-16-031, filed 12/1/05, effective 1/1/06. Statutory Authority: Chapter 28B.50 RCW. 00-14-017, 131-16-031, filed 6/28/00, effective 7/29/00. Statutory Authority: RCW 28B.10.400 and chapter 28B.50 RCW. 98-14-033, 131-16-031, filed 6/23/98, effective 7/24/98. Statutory Authority: RCW 28B.10.400. 91-13-048 (Resolution No. 91-20, Order 129), 131-16-031, filed 6/14/91, effective 7/15/91.]


AMENDATORY SECTION(Amending WSR 10-22-073, filed 10/29/10, effective 11/29/10)

WAC 131-16-061   Supplemental retirement benefits.   (1) A participant is eligible to receive supplemental retirement benefit payments, provided the amount of the supplemental retirement benefit as calculated in accordance with this section is a positive amount, if at the time of retirement the participant ((is)):

(a) Participated in the plan prior to July 1, 2011; and

(b) Is at least age sixty-two; and

(c) Has ten years of full-time service in the plan at a Washington public institution of higher education((: Provided, That the amount of the supplemental retirement benefit, as calculated in accordance with the provisions of this section, is a positive amount)).

(2) Subject to the provisions of subdivisions (c), (d), and (e) of this subsection, the annual amount of supplemental retirement benefit payable to a participant upon retirement is the excess, if any, when the value determined in subdivision (b) is subtracted from the value determined in subdivision (a), as follows:

(a) The lesser of fifty percent of the participant's average annual salary or two percent of the average annual salary multiplied by the number of years of full-time service; provided that if the participant did not elect to contribute ten percent of salary beginning July 1, 1974, or if later, after attainment of age fifty, service for such periods shall be calculated at the rate of one and one-half percent instead of two percent.

(b) The combined retirement benefit from the TIAA-CREF annuity and any other Washington state sponsored retirement plan that the participant would receive in the first month of retirement multiplied by twelve: Provided, That the state board retirement plan benefit shall be calculated on the following assumptions:

(i) After July 1, 1974, fifty percent of the combined contributions were made to the TIAA traditional annuity and fifty percent to the CREF stock account during each year of full-time service: Provided, That benefit calculations related to contributions made prior to July 1, 1974, shall be computed on the basis of actual allocations between TIAA and CREF; and

(ii) The full TIAA-CREF annuity accumulations, including all dividends payable by TIAA Traditional Annuity and further including the amounts, if any, paid in a single sum under the retirement transition benefit option, were fully settled on a joint and two-thirds survivorship option with a ten-year guarantee, using actual ages of retiree and spouse, but not exceeding a five-year difference; except that for unmarried participants the TIAA Traditional Annuity accumulations, including dividends, were settled on an installment refund option and the CREF Stock Account accumulations were settled on a life annuity with ten-year guarantee option, all to be based on TIAA-CREF estimates at the time of retirement; and

(iii) Annuity benefits purchased by premiums paid other than as a participant in a Washington public institution of higher education retirement plan shall be excluded.

(iv) For the purposes of this calculation, the assumptions applied to the plan accumulation settlement shall also apply to settlement of the benefit from any other retirement plan.

(c) The amount of supplemental retirement benefit for a participant who has not attained age sixty-five at retirement is the amount calculated in subsection (2) of this section reduced by one-half of one percent for each calendar month remaining until age sixty-five: Provided, That the supplemental retirement benefit for an otherwise qualified participant retired for reason of health or permanent disability shall not be so reduced.

(d) Any portion of participant's plan accumulation paid to a participant's spouse upon dissolution of a marriage shall be included in any subsequent calculation of supplemental retirement benefits just as if these funds had remained in the participant's plan account.

(e) The selection of a retirement option other than the joint and two-thirds survivorship with ten-year guarantee shall not alter the method of calculating the supplemental retirement benefit; however, if the participant's combined plan retirement benefit and calculated supplemental retirement benefit exceeds fifty percent of the participant's average annual salary, the supplemental retirement benefit shall be reduced so that the total combined benefits do not exceed fifty percent of average annual salary.

(3) The payment of supplemental retirement benefits shall be consistent with the following provisions:

(a) Supplemental retirement benefits shall be paid in equal monthly installments, except that if such monthly installments should be less than ten dollars, such benefit payments may be paid at longer intervals as determined by the state board.

(b) Supplemental retirement benefit payments will continue for the lifetime of the retired participant; however, prior to retirement, a participant may choose to provide for the continuation of supplemental retirement benefit payments, on an actuarially equivalent reduced basis, to his or her spouse or designated beneficiary after the retiree's death. Notification of such choice shall be filed in writing with the state board and shall be irrevocable after retirement. If such option is chosen, the supplemental retirement benefit payments shall be in the same proportion as any plan survivor annuity option potentially payable to and elected by the participant. If a designation of a survivor's option is not made and the participant dies after attaining age sixty-two but prior to retirement, any supplemental benefit payable shall be based on the two-thirds benefit to survivor option.

(c) Prior to making any supplemental benefit payments, the state board shall obtain a document signed by the participant and spouse, if any, or designated beneficiary acknowledging the supplemental retirement benefit option chosen by the participant.

(4) A retired participant who is reemployed shall continue to be eligible to receive retirement income benefits, except that the supplemental retirement benefit shall not continue during periods of employment for more than forty percent of full-time or seventy hours per month or five months duration in any fiscal year. Retirement contributions shall not be made from the salary for such employment, unless the individual once again becomes eligible to participate under the provisions of WAC 131-16-021.

[Statutory Authority: RCW 28B.10.400. 10-22-073, 131-16-061, filed 10/29/10, effective 11/29/10; 05-24-051, 131-16-061, filed 12/1/05, effective 1/1/06. Statutory Authority: RCW 28B.10.400 and chapter 28B.50 RCW. 98-14-033, 131-16-061, filed 6/23/98, effective 7/24/98. Statutory Authority: RCW 28B.10.400. 91-13-048 (Resolution No. 91-20, Order 129), 131-16-061, filed 6/14/91, effective 7/15/91; 83-20-042 (Order 95, Resolution No. 83-25), 131-16-061, filed 9/28/83. Statutory Authority: RCW 28B.10.400(3). 82-11-014 (Order 91, Resolution No. 82-6), 131-16-061, filed 5/10/82. Statutory Authority: RCW 28B.10.400. 79-12-069 (Order 80, Resolution No. 79-44), 131-16-061, filed 11/30/79; Order 28, 131-16-061, filed 7/1/74.]

Washington State Code Reviser's Office