As Reported by the Senate Insurance, Commerce and Labor Committee

129th General Assembly Regular Session 2011-2012

S. B. No. 345

Senators Niehaus, Kearney 

Cosponsor: Senator Bacon 

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A BILL

To amend sections 5505.01, 5505.03, 5505.15,

1

5505.174, 5505.28, and 5505.54 of the Revised Code

2

to revise the law governing the State Highway

3

Patrol Retirement System.

4

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 5505.01, 5505.03, 5505.15, 5505.174,	5
5505.28, and 5505.54 of the Revised Code be amended to read as	6
follows:	7

Sec. 5505.01.  As used in this chapter:

8

(A) "Employee" means any qualified employee in the uniform	9
division of the state highway patrol, any qualified employee in	10
the radio division hired prior to November 2, 1989, and any state	11
highway patrol cadet attending training school pursuant to section	12
5503.05 of the Revised Code whose attendance at the school begins	13
on or after June 30, 1991. "Employee" includes the superintendent	14
of the state highway patrol. In all cases of doubt, the state	15
highway patrol retirement board shall determine whether any person	16
is an employee as defined in this division, and the decision of	17
the board is final.	18

(B) "Prior service" means all service rendered as an employee	19
of the state highway patrol prior to September 5, 1941, to the	20
extent credited by the board, provided that in no case shall prior	21
service include service rendered prior to November 15, 1933.	22

(C) "Total service" means all service rendered by an employee	23
to the extent credited by the board. Total service includes all of	24
the following:	25

(1) Contributing service rendered by the employee since last	26
becoming a member of the state highway patrol retirement system;	27

(2) All prior service credit;

28

(3) Restored service credit as provided in this chapter;

29

(4) Military service credit purchased under division (D) of	30
section 5505.16 or section 5505.25 of the Revised Code;	31

(5) Credit granted under division (C) of section 5505.17 or	32
section 5505.201, 5505.40, or 5505.402 of the Revised Code;	33

(6) Credit for any period, not to exceed three years, during	34
which the member was out of service and receiving benefits under	35
Chapters 4121. and 4123. of the Revised Code.	36

(D) "Beneficiary" means any person, except a retirant, who is	37
in receipt of a pension or other benefit payable from funds of the	38
retirement system.	39

(E) "Regular interest" means interest compounded at rates	40
designated from time to time by the retirement board.	41

(F) "Plan" means the provisions of this chapter.

42

(G) "Retirement system" or "system" means the state highway	43
patrol retirement system created and established in the plan.	44

(H) "Contributing service" means all service rendered by a	45
member since September 4, 1941, for which deductions were made	46
from the member's salary under the plan.	47

(I) "Retirement board" or "board" means the state highway	48
patrol retirement board provided for in the plan.	49

(J) Except as provided in section 5505.18 of the Revised	50
Code, "member" means any employee included in the membership of	51
the retirement system, whether or not rendering contributing	52
service.	53

(K) "Retirant" means any member who retires with a pension	54
payable from the retirement system.	55

(L) "Accumulated contributions" means the sum of the	56
following credited to a member's individual account in the	57
employees' savings fund:	58

(1) All amounts deducted from the salary of the member;

59

(2) All amounts paid by the member to purchase state highway	60
patrol retirement system service credit pursuant to this chapter	61
or other state law.	62

(M)(1) Except as provided in division (M)(2) of this section,	63
"final average salary" means the average of the highest salary	64
paid a member during any threefive consecutive or nonconsecutive	65
years.	66

If a member has less than threefive years of contributing	67
service, the member's final average salary shall be the average of	68
the annual rates of salary paid to the member during the member's	69
total years of contributing service.	70

(2) If a member is credited with service under division	71
(C)(6) of this section or division (D) of section 5505.16 of the	72
Revised Code, the member's final average salary shall be the	73
average of the highest salary that was paid to the member or would	74
have been paid to the member, had the member been rendering	75
contributing service, during any threefive consecutive or	76
nonconsecutive years. If that member has less than threefive	77
years of total service, the member's final average salary shall be	78
the average of the annual rates of salary that were paid to the	79
member or would have been paid to the member during the member's	80
years of total service.	81

(N) "Pension" means an annual amount payable by the	82
retirement system throughout the life of a person or as otherwise	83
provided in the plan.	84

(O) "Pension reserve" means the present value of any pension,	85
or benefit in lieu of any pension, computed upon the basis of	86
mortality and other tables of experience and interest the board	87
shall from time to time adopt.	88

(P) "Deferred pension" means a pension for which an eligible	89
member of the system has made application and which is payable as	90
provided in division (A) or (B) of section 5505.16 of the Revised	91
Code.	92

(Q) "Retirement" means termination as an employee of the	93
state highway patrol, with application having been made to the	94
system for a pension or a deferred pension.	95

(R) "Fiduciary" means any of the following:

96

(1) A person who exercises any discretionary authority or	97
control with respect to the management of the system, or with	98
respect to the management or disposition of its assets;	99

(2) A person who renders investment advice for a fee, direct	100
or indirect, with respect to money or property of the system;	101

(3) A person who has any discretionary authority or	102
responsibility in the administration of the system.	103

(S)(1) Except as otherwise provided in this division,	104
"salary" means all compensation, wages, and other earnings paid to	105
a member by reason of employment but without regard to whether any	106
of the compensation, wages, or other earnings are treated as	107
deferred income for federal income tax purposes. Salary includes	108
all of the following:	109

(a) Payments for shift differential, hazard duty,	110
professional achievement, and longevity;	111

(b) Payments for occupational injury leave, personal leave,	112
sick leave, bereavement leave, administrative leave, and vacation	113
leave used by the member;	114

(c) Payments made under a disability leave program sponsored	115
by the state for which the state is required by section 5505.151	116
of the Revised Code to make periodic employer and employee	117
contributions to the retirement system.	118

(2) "Salary" does not include any of the following:

119

(a) Payments resulting from the conversion of accrued but	120
unused sick leave, personal leave, compensatory time, and vacation	121
leave;	122

(b) Payments made by the state to provide life insurance,	123
sickness, accident, endowment, health, medical, hospital, dental,	124
or surgical coverage, or other insurance for the member or the	125
member's family, or amounts paid by the state to the member in	126
lieu of providing that insurance;	127

(c) Payments for overtime work;

128

(d) Incidental benefits, including lodging, food, laundry,	129
parking, or services furnished by the state, use of property or	130
equipment of the state, and reimbursement for job-related expenses	131
authorized by the state including moving and travel expenses and	132
expenses related to professional development;	133

(e) Payments made to or on behalf of a member that are in	134
excess of the annual compensation that may be taken into account	135
by the retirement system under division (a)(17) of section 401 of	136
the "Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C.A.	137
401 (a)(17), as amended;	138

(f) Payments made under division (B), (C), or (E) of section	139
5923.05 of the Revised Code, Section 4 of Substitute Senate Bill	140
No. 3 of the 119th general assembly, Section 3 of Amended	141
Substitute Senate Bill No. 164 of the 124th general assembly, or	142
Amended Substitute House Bill No. 405 of the 124th general	143
assembly.	144

(3) The retirement board shall determine by rule whether any	145
compensation, wages, or earnings not enumerated in this division	146
are salary, and its decision shall be final.	147

(T) "Actuary" means an individual who satisfies all of the	148
following requirements:	149

(1) Is a member of the American academy of actuaries;

150

(2) Is an associate or fellow of the society of actuaries;

151

(3) Has a minimum of five years' experience in providing	152
actuarial services to public retirement plans.	153

Sec. 5505.03.  (A) The funds created by this section are the	154
"employees' savings fund," "employer's accumulation fund,"	155
"pension reserve fund," "survivors' benefit fund," "income fund,"	156
and "expense fund." When reference is made to any of such funds,	157
such reference is made to each as a separate legal entity;	158
provided that the moneys in the funds may be intermingled for	159
deposit and investment purposes.	160

(B) The employees' savings fund is the fund in which shall be	161
accumulated the contributions deducted from the salaries of	162
members, except as provided in division (B)(1)(b) of section	163
5505.54 of the Revised Code. Any refunds of accumulated	164
contributions, as provided in the plan, shall be paid from such	165
fund. Upon a member's retirement, histhe accumulated	166
contributions standing to histhe member's credit in the fund	167
shall be transferred to the pension reserve fund if histhe	168
member's retirement occurs on or after January 1, 1966, or to the	169
employer's accumulation fund if histhe member's retirement	170
occurred prior to January 1, 1966. If a pension is payable on	171
account of the death of a member, histhe accumulated	172
contributions standing to histhe member's credit in the	173
employees' savings fund shall be transferred to the survivors'	174
benefit fund if histhe member's death occurs after January 1,	175
1966, or to the employer's accumulation fund if histhe member's	176
death occurs prior to January 1, 1966.	177

(C)(1) The employer's accumulation fund is the fund in which	178
shall be accumulated the state's contribution to the state highway	179
patrol retirement system and the amounts contributed under	180
division (B)(1)(b) of section 5505.54 of the Revised Code. Upon a	181
member's retirement after January 1, 1966, the difference between	182
histhe member's pension reserve and histhe member's accumulated	183
contributions shall be transferred to the pension reserve fund. If	184
a pension is payable on account of a member's death occurring	185
after January 1, 1966, the difference between the pension reserve	186
for that pension and histhe member's accumulated contributions	187
shall be transferred to the survivors' benefit fund.	188

(2) All pensions allowed and payable prior to January 1,	189
1966, shall be continued according to the provisions of the plan	190
in force the day preceding January 1, 1966, unless otherwise	191
provided for in this chapter and shall be paid from the employer's	192
accumulation fund.	193

(D) The pension reserve fund is the fund from which shall be	194
paid all pensions on account of members who retire on or after	195
January 1, 1966. If a disability retirant returns to the employ of	196
the state highway patrol, histhe disability retirant's pension	197
reserve at that time shall be transferred to the employees'	198
savings fund and the employer's accumulation fund in the same	199
proportion as the pension reserve was originally transferred to	200
the pension reserve fund.	201

(E) The survivors' benefit fund is the fund from which shall	202
be paid all pensions, payable under section 5505.17 of the Revised	203
Code, on account of members who die on or after January 1, 1966.	204

(F)(1) The income fund is the fund to which shall be credited	205
all interest, dividends, distributions, and other income derived	206
from deposits and investments of moneys of the retirement system,	207
all gifts and bequests to the system, all transfers from the	208
employees' savings fund because of lack of claimant, and any other	209
moneys the disposition of which is not otherwise provided for in	210
the plan.	211

(2) If the balance in the income fund exceeds the	212
requirements of the fund, the state highway patrol retirement	213
board may transfer amounts from the income fund to meet special	214
requirements of the various other funds of the retirement system.	215

(G) The expense fund is the fund from which the expense of	216
the administration of this chapter shall be paid, exclusive of	217
amounts payable as retirement allowances and as other benefits.	218
The state highway patrol retirement board shall estimate annually	219
the amount to be provided in the expense fund and such amount	220
shall be transferred from the income fund. If such amount is	221
insufficient during any year, the board is authorized to transfer	222
the amount of such insufficiency from the income fund.	223

Sec. 5505.15.  (A)(1) A member of the state highway patrol	224
retirement system shall contribute ten per centa certain	225
percentage of the member's annual salary to the state highway	226
patrol retirement fund. The percentage shall be not less than ten	227
per cent of the member's annual salary but not more than fourteen	228
per cent. The state highway patrol retirement board shall	229
establish and may adjust the rate as it considers necessary to	230
meet the amortization period requirement of section 5505.121 of	231
the Revised Code. The board shall base its determination of the	232
necessary rate on the annual actuarial valuation required by	233
section 5505.12 of the Revised Code. The amount shall be deducted	234
by the employer from the employee's salary for each payroll	235
period.	236

(2) The total contributions arising from deductions made	237
prior to January 1, 1966, from the salaries of members in the	238
employ of the state highway patrol and standing to the credit of	239
their individual accounts in the retirement fund shall be	240
transferred and credited to their respective individual accounts	241
in the employees' savings fund.	242

(B) The state shall annually pay into the employer	243
accumulation fund, in monthly or less frequent installments as the	244
state highway patrol retirement board requires, the employer	245
contribution. The employer contribution shall be an amount equal	246
to twenty-six and one-half per cent of the total salaries paid	247
contributing members. If a member severs connection with the	248
patrol or is dismissed, the employer contribution shall remain in	249
the retirement system.	250

The rate percentage of the employer contribution shall be	251
certified by the board to the director of budget and management	252
and shall not be lower than nine per cent of the total salaries	253
paid contributing members and shall not exceed three times the	254
rate percentage being deducted from the annual salaries of	255
contributing members. The board shall prepare and submit to the	256
director, on or before the first day of November of each	257
even-numbered year, an estimate of the amounts necessary to pay	258
the state's obligations accruing during the biennium beginning the	259
first day of July of the following year. Such amounts shall be	260
included in the budget and allocated as certified by the board.	261

Sec. 5505.174.  (A) The following persons are eligible to	262
receive an increase under this section:	263

(1) PersonsEligibility for an increase under this section	264
shall be determined as follows:	265

(1) For a person whose pension effective date is prior to the	266
effective date of this amendment, an "eligible person" is one of	267
the following:	268

(a) A person fifty-three years old or older who havehas been	269
receiving pensionsa pension pursuant to division (B) of section	270
5505.16, division (A)(1) of section 5505.17, or division (B) of	271
section 5505.18 of the Revised Code for not less than twelve	272
months;	273

(2) Persons who have(b) A person who has been receiving	274
pensionsa pension pursuant to division (B) of section 5505.18 of	275
the Revised Code for not less than sixty months regardless of age;	276

(3)Persons who have(c) A person who has been receiving	277
pensionsa pension pursuant to section 5505.162 or division	278
(A)(3), (4), (5), (6), or (7) of section 5505.17 of the Revised	279
Code for not less than twelve months regardless of age.	280

(2) For a person whose pension effective date is on or after	281
the effective date of this amendment, an "eligible person" is a	282
person who is sixty years old or older who has been receiving a	283
pension pursuant to division (B) of section 5505.16, section	284
5505.162, division (A)(1), (3), (4), (5), (6), or (7) of section	285
5505.17, or division (B) of section 5505.18 of the Revised Code	286
for not less than twelve months.	287

(B) The(1) Except as otherwise provided in this section, the	288
state highway patrol retirement board shall annually increase each	289
benefitpensions payable to eligible persons under this chapter by	290
three per cent, except that no benefit shall exceed the limit	291
established by section 415 of the "Internal Revenue Code of 1986,"	292
100 Stat. 2085, 26 U.S.C.A. 415, as amended.	293

The first increase is payable to all persons becoming	294
eligible on or after November 18, 1981. The increase is payable	295
for each ensuing twelve-month period or until the next increase is	296
granted under this section, whichever is laterin accordance with	297
the following:	298

(a) For each person sixty-five years of age or older who is	299
receiving a pension not greater than one hundred eighty-five per	300
cent of the federal poverty level for a family of two persons, as	301
revised annually by the United States department of health and	302
human services in accordance with section 673(2) of the "Omnibus	303
Reconciliation Act of 1981," 95 Stat. 511, 42 U.S.C. 9902, as	304
amended, the board shall increase the pension by three per cent.	305

(b) For persons other than those described in division	306
(B)(1)(a) of this section, the board may increase the pension. Any	307
increase shall be determined by the board based on compliance with	308
the amortization period requirement of section 5505.121 of the	309
Revised Code. The board's determination shall be based on the	310
annual actuarial valuation required by section 5505.12 of the	311
Revised Code. If the board determines that an increase may be	312
made, the increase shall not exceed three per cent of the eligible	313
person's pension.	314

(2) No increase under this section shall exceed the limit	315
established by section 415 of the "Internal Revenue Code of 1986,"	316
100 Stat. 2085, 26 U.S.C. 415, as amended.	317

(3) The date of the first increase paid under this section	318
shall be the anniversary date for future increases. The pension	319
used in the first calculation of an increase under this section	320
shall remain as the base for all future increases paid under this	321
section, unless a new base is established.	322

Increases paid in years subsequent to the year of the first	323
increase paid under this section shall be paid to all persons who,	324
on the date that the increase is authorized by the board, are	325
eligible as provided in this section.	326

(C) If payment of a portion of a benefit is made to an	327
alternate payee under section 5505.261 of the Revised Code,	328
increases under this section granted while the order is in effect	329
shall be apportioned between the alternate payee and the eligible	330
person in the same proportion that the amount being paid to the	331
alternate payee bears to the amount paid to the eligible person.	332

If payment of a portion of a benefit is made to one or more	333
beneficiaries under "option 4" under division (A)(4) of section	334
5505.162 of the Revised Code, each increase under this section	335
granted while the plan of payment is in effect shall be divided	336
among the designated beneficiaries in accordance with the portion	337
each beneficiary has been allocated.	338

(D) The board shall adopt, and may amend or rescind, any rule	339
necessary to carry out this section.	340

Sec. 5505.28.  (A) The state highway patrol retirement board	341
may enter into an agreement with insurance companies, health	342
insuring corporations, or government agencies authorized to do	343
business in the state for issuance of a policy or contract of	344
health, medical, hospital, or surgical benefits, or any	345
combination thereof, for those persons receiving pensions and	346
subscribing to the plan. Notwithstanding any other provision of	347
this chapter, the policy or contract may also include coverage for	348
any eligible individual's spouse and dependent children and for	349
any of the individual's sponsored dependents as the board	350
considers appropriate.	351

If all or any portion of the policy or contract premium is to	352
be paid by any individual receiving a service, disability, or	353
survivor pension or benefit, the individual shall, by written	354
authorization, instruct the board to deduct from the individual's	355
pension or benefit the premium agreed to be paid by the individual	356
to the company, corporation, or agency.	357

The board may contract for coverage on the basis of part or	358
all of the cost of the coverage to be paid from appropriate funds	359
of the state highway patrol retirement system. The cost paid from	360
the funds of the system shall be included in the employer's	361
contribution rate as provided by section 5505.15 of the Revised	362
Code.	363

(B) The board shall, beginning the month following receipt of	364
satisfactory evidence of the payment for coverage, pay monthly to	365
each recipient of a pension under the state highway patrol	366
retirement system who is eligible for medical insurance coverage	367
under part B of the medicare program established under Title XVIII	368
of "The Social Security Amendments of 1965," 79 Stat. 301 (1965),	369
42 U.S.C.A. 1395j, as amended, an amount established by board rule	370
not exceeding the basic premium for such coverage.	371

(C) The board shall establish by rule requirements for the	372
coordination of any coverage, payment, or benefit provided under	373
this section with any similar coverage, payment, or benefit made	374
available to the same individual by the public employees	375
retirement system, Ohio police and fire pension fund, state	376
teachers retirement system, or school employees retirement system.	377

(D) The board shall make all other necessary rules pursuant	378
to the purpose and intent of this section.	379

Sec. 5505.54.  (A) During the period beginning on the	380
effective date of an election to participate in the deferred	381
retirement option plan and ending on the date participation	382
ceases, a member's monthly pension amount determined under section	383
5505.53 of the Revised Code shall accrue to the member's benefit.	384
To this amount shall be added any benefit increases the member	385
would be eligible for under section 5505.174 of the Revised Code	386
had the member, on the effective date of the member's election,	387
retired under section 5505.16 of the Revised Code.	388

(B)(1) The amounts contributed under division (A) of section	389
5505.15 of the Revised Code by a member participating in the	390
deferred retirement option plan shall accrue to the member's	391
benefitbe credited as follows:	392

(a) Ten per cent of the member's annual salary shall accrue	393
to the member's benefit.	394

(b) Any amount of the member's annual salary that is in	395
excess of ten per cent shall be credited to the employer's	396
accumulation fund.	397

(2) The state highway patrol retirement system shall credit	398
to the employer's accumulation fund the amounts contributed by the	399
state under section 5505.15 of the Revised Code on behalf of a	400
member participating in the deferred retirement option plan.	401

(C) During the period beginning on the election's effective	402
date and ending on the date the member ceases participation in the	403
plan, the amounts described in divisions (A) and (B)(1)(a) of this	404
section shall earn interest at an annual rate established by the	405
state highway patrol retirement board and compounded annually	406
using a method established by rule adopted under section 5505.50	407
of the Revised Code.	408

Section 2. That existing sections 5505.01, 5505.03, 5505.15,	409
5505.174, 5505.28, and 5505.54 of the Revised Code are hereby	410
repealed.	411

Section 3. The amendments by this act of section 5505.01 of	412
the Revised Code take effect January 1, 2015.	413