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Sub. S. B. No. 345 As Enrolled
(129th General Assembly)
(Substitute Senate Bill Number 345)
AN ACT
To amend sections 5505.01, 5505.03, 5505.15,
5505.174, 5505.28, and 5505.54 of the Revised Code
to revise the law governing the State Highway
Patrol Retirement System.
Be it enacted by the General Assembly of the State of Ohio:
SECTION 1. That sections 5505.01, 5505.03, 5505.15, 5505.174,
5505.28, and 5505.54 of the Revised Code be amended to read as
follows:
Sec. 5505.01. As used in this chapter:
(A) "Employee" means any qualified employee in the uniform
division of the state highway patrol, any qualified employee in
the radio division hired prior to November 2, 1989, and any state
highway patrol cadet attending training school pursuant to section
5503.05 of the Revised Code whose attendance at the school begins
on or after June 30, 1991. "Employee" includes the superintendent
of the state highway patrol. In all cases of doubt, the state
highway patrol retirement board shall determine whether any person
is an employee as defined in this division, and the decision of
the board is final.
(B) "Prior service" means all service rendered as an employee
of the state highway patrol prior to September 5, 1941, to the
extent credited by the board, provided that in no case shall prior
service include service rendered prior to November 15, 1933.
(C) "Total service" means all service rendered by an employee
to the extent credited by the board. Total service includes all of
the following:
(1) Contributing service rendered by the employee since last
becoming a member of the state highway patrol retirement system;
(2) All prior service credit;
(3) Restored service credit as provided in this chapter;
(4) Military service credit purchased under division (D) of
section 5505.16 or section 5505.25 of the Revised Code;
(5) Credit granted under division (C) of section 5505.17 or
section 5505.201, 5505.40, or 5505.402 of the Revised Code;
(6) Credit for any period, not to exceed three years, during
which the member was out of service and receiving benefits under
Chapters 4121. and 4123. of the Revised Code.
(D) "Beneficiary" means any person, except a retirant, who is
in receipt of a pension or other benefit payable from funds of the
retirement system.
(E) "Regular interest" means interest compounded at rates
designated from time to time by the retirement board.
(F) "Plan" means the provisions of this chapter.
(G) "Retirement system" or "system" means the state highway
patrol retirement system created and established in the plan.
(H) "Contributing service" means all service rendered by a
member since September 4, 1941, for which deductions were made
from the member's salary under the plan.
(I) "Retirement board" or "board" means the state highway
patrol retirement board provided for in the plan.
(J) Except as provided in section 5505.18 of the Revised
Code, "member" means any employee included in the membership of
the retirement system, whether or not rendering contributing
service.
(K) "Retirant" means any member who retires with a pension
payable from the retirement system.
(L) "Accumulated contributions" means the sum of the
following credited to a member's individual account in the
employees' savings fund:
(1) All amounts deducted from the salary of the member;
(2) All amounts paid by the member to purchase state highway
patrol retirement system service credit pursuant to this chapter
or other state law.
(M)(1) Except as provided in division (M)(2) of this section,
"final average salary" means the average of the highest salary
paid a member during any three five consecutive or nonconsecutive
years.
If a member has less than three five years of contributing
service, the member's final average salary shall be the average of
the annual rates of salary paid to the member during the member's
total years of contributing service.
(2) If a member is credited with service under division
(C)(6) of this section or division (D) of section 5505.16 of the
Revised Code, the member's final average salary shall be the
average of the highest salary that was paid to the member or would
have been paid to the member, had the member been rendering
contributing service, during any three
five consecutive or
nonconsecutive years. If that member has less than three five
years of total service, the member's final average salary shall be
the average of the annual rates of salary that were paid to the
member or would have been paid to the member during the member's
years of total service.
(N) "Pension" means an annual amount payable by the
retirement system throughout the life of a person or as otherwise
provided in the plan.
(O) "Pension reserve" means the present value of any pension,
or benefit in lieu of any pension, computed upon the basis of
mortality and other tables of experience and interest the board
shall from time to time adopt.
(P) "Deferred pension" means a pension for which an eligible
member of the system has made application and which is payable as
provided in division (A) or (B) of section 5505.16 of the Revised
Code.
(Q) "Retirement" means termination as an employee of the
state highway patrol, with application having been made to the
system for a pension or a deferred pension.
(R) "Fiduciary" means any of the following:
(1) A person who exercises any discretionary authority or
control with respect to the management of the system, or with
respect to the management or disposition of its assets;
(2) A person who renders investment advice for a fee, direct
or indirect, with respect to money or property of the system;
(3) A person who has any discretionary authority or
responsibility in the administration of the system.
(S)(1) Except as otherwise provided in this division,
"salary" means all compensation, wages, and other earnings paid to
a member by reason of employment but without regard to whether any
of the compensation, wages, or other earnings are treated as
deferred income for federal income tax purposes. Salary includes
all of the following:
(a) Payments for shift differential, hazard duty,
professional achievement, and longevity;
(b) Payments for occupational injury leave, personal leave,
sick leave, bereavement leave, administrative leave, and vacation
leave used by the member;
(c) Payments made under a disability leave program sponsored
by the state for which the state is required by section 5505.151
of the Revised Code to make periodic employer and employee
contributions to the retirement system.
(2) "Salary" does not include any of the following:
(a) Payments resulting from the conversion of accrued but
unused sick leave, personal leave, compensatory time, and vacation
leave;
(b) Payments made by the state to provide life insurance,
sickness, accident, endowment, health, medical, hospital, dental,
or surgical coverage, or other insurance for the member or the
member's family, or amounts paid by the state to the member in
lieu of providing that insurance;
(c) Payments for overtime work;
(d) Incidental benefits, including lodging, food, laundry,
parking, or services furnished by the state, use of property or
equipment of the state, and reimbursement for job-related expenses
authorized by the state including moving and travel expenses and
expenses related to professional development;
(e) Payments made to or on behalf of a member that are in
excess of the annual compensation that may be taken into account
by the retirement system under division (a)(17) of section 401 of
the "Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C.A.
401 (a)(17), as amended;
(f) Payments made under division (B), (C), or (E) of section
5923.05 of the Revised Code, Section 4 of Substitute Senate Bill
No. 3 of the 119th general assembly, Section 3 of Amended
Substitute Senate Bill No. 164 of the 124th general assembly, or
Amended Substitute House Bill No. 405 of the 124th general
assembly.
(3) The retirement board shall determine by rule whether any
compensation, wages, or earnings not enumerated in this division
are salary, and its decision shall be final.
(T) "Actuary" means an individual who satisfies all of the
following requirements:
(1) Is a member of the American academy of actuaries;
(2) Is an associate or fellow of the society of actuaries;
(3) Has a minimum of five years' experience in providing
actuarial services to public retirement plans.
Sec. 5505.03. (A) The funds created by this section are the
"employees' savings fund," "employer's accumulation fund,"
"pension reserve fund," "survivors' benefit fund," "income fund,"
and "expense fund." When reference is made to any of such funds,
such reference is made to each as a separate legal entity;
provided that the moneys in the funds may be intermingled for
deposit and investment purposes.
(B) The employees' savings fund is the fund in which shall be
accumulated the contributions deducted from the salaries of
members, except as provided in division (B)(1)(b) of section
5505.54 of the Revised Code. Any refunds of accumulated
contributions, as provided in the plan, shall be paid from such
fund. Upon a member's retirement, his the accumulated
contributions standing to
his the member's credit in the fund
shall be transferred to the pension reserve fund if his the
member's retirement occurs on or after January 1, 1966, or to the
employer's accumulation fund if his the member's retirement
occurred prior to January 1, 1966. If a pension is payable on
account of the death of a member, his the accumulated
contributions standing to
his the member's credit in the
employees' savings fund shall be transferred to the survivors'
benefit fund if his the member's death occurs after January 1,
1966, or to the employer's accumulation fund if his the member's
death occurs prior to January 1, 1966.
(C)(1) The employer's accumulation fund is the fund in which
shall be accumulated the state's contribution to the state highway
patrol retirement system and the amounts contributed under
division (B)(1)(b) of section 5505.54 of the Revised Code. Upon a
member's retirement after January 1, 1966, the difference between
his the member's pension reserve and his the member's accumulated
contributions shall be transferred to the pension reserve fund. If
a pension is payable on account of a member's death occurring
after January 1, 1966, the difference between the pension reserve
for that pension and his the member's accumulated contributions
shall be transferred to the survivors' benefit fund.
(2) All pensions allowed and payable prior to January 1,
1966, shall be continued according to the provisions of the plan
in force the day preceding January 1, 1966, unless otherwise
provided for in this chapter and shall be paid from the employer's
accumulation fund.
(D) The pension reserve fund is the fund from which shall be
paid all pensions on account of members who retire on or after
January 1, 1966. If a disability retirant returns to the employ of
the state highway patrol, his the disability retirant's pension
reserve at that time shall be transferred to the employees'
savings fund and the employer's accumulation fund in the same
proportion as the pension reserve was originally transferred to
the pension reserve fund.
(E) The survivors' benefit fund is the fund from which shall
be paid all pensions, payable under section 5505.17 of the Revised
Code, on account of members who die on or after January 1, 1966.
(F)(1) The income fund is the fund to which shall be credited
all interest, dividends, distributions, and other income derived
from deposits and investments of moneys of the retirement system,
all gifts and bequests to the system, all transfers from the
employees' savings fund because of lack of claimant, and any other
moneys the disposition of which is not otherwise provided for in
the plan.
(2) If the balance in the income fund exceeds the
requirements of the fund, the state highway patrol retirement
board may transfer amounts from the income fund to meet special
requirements of the various other funds of the retirement system.
(G) The expense fund is the fund from which the expense of
the administration of this chapter shall be paid, exclusive of
amounts payable as retirement allowances and as other benefits.
The state highway patrol retirement board shall estimate annually
the amount to be provided in the expense fund and such amount
shall be transferred from the income fund. If such amount is
insufficient during any year, the board is authorized to transfer
the amount of such insufficiency from the income fund.
Sec. 5505.15. (A)(1) A member of the state highway patrol
retirement system shall contribute
ten per cent a certain
percentage of the member's annual salary to the state highway
patrol retirement fund. The percentage shall be not less than ten
per cent of the member's annual salary but not more than fourteen
per cent. The state highway patrol retirement board shall
establish and may adjust the rate as it considers necessary to
meet the amortization period requirement of section 5505.121 of
the Revised Code. The board shall base its determination of the
necessary rate on the annual actuarial valuation required by
section 5505.12 of the Revised Code. The amount shall be deducted
by the employer from the employee's salary for each payroll
period.
(2) The total contributions arising from deductions made
prior to January 1, 1966, from the salaries of members in the
employ of the state highway patrol and standing to the credit of
their individual accounts in the retirement fund shall be
transferred and credited to their respective individual accounts
in the employees' savings fund.
(B) The state shall annually pay into the employer
accumulation fund, in monthly or less frequent installments as the
state highway patrol retirement board requires, the employer
contribution. The employer contribution shall be an amount equal
to twenty-six and one-half per cent of the total salaries paid
contributing members. If a member severs connection with the
patrol or is dismissed, the employer contribution shall remain in
the retirement system.
The rate percentage of the employer contribution shall be
certified by the board to the director of budget and management
and shall not be lower than nine per cent of the total salaries
paid contributing members and shall not exceed three times the
rate percentage being deducted from the annual salaries of
contributing members. The board shall prepare and submit to the
director, on or before the first day of November of each
even-numbered year, an estimate of the amounts necessary to pay
the state's obligations accruing during the biennium beginning the
first day of July of the following year. Such amounts shall be
included in the budget and allocated as certified by the board.
Sec. 5505.174. (A) The following persons are eligible to
receive an increase under this section:
(1) Persons Eligibility for an increase under this section
shall be determined as follows:
(1) For a person whose pension effective date is prior to the
effective date of this amendment, an "eligible person" is one of
the following:
(a) A person fifty-three years old or older who have has been
receiving pensions a pension pursuant to division (B) of section
5505.16, division (A)(1) of section 5505.17, or division (B) of
section 5505.18 of the Revised Code for not less than twelve
months;
(2) Persons who have (b) A person who has been receiving
pensions a pension pursuant to division (B) of section 5505.18 of
the Revised Code for not less than sixty months regardless of age;
(3)Persons who have (c) A person who has been receiving
pensions a pension pursuant to section 5505.162 or division
(A)(3), (4), (5), (6), or (7) of section 5505.17 of the Revised
Code for not less than twelve months regardless of age.
(2) For a person whose pension effective date is on or after
the effective date of this amendment, an "eligible person" is a
person who is sixty years old or older who has been receiving a
pension pursuant to division (B) of section 5505.16, section
5505.162, division (A)(1), (3), (4), (5), (6), or (7) of section
5505.17, or division (B) of section 5505.18 of the Revised Code
for not less than twelve months.
(B) The (1) Except as otherwise provided in this section, the
state highway patrol retirement board shall annually increase each
benefit pensions payable to eligible persons under this chapter by
three per cent, except that no benefit shall exceed the limit
established by section 415 of the "Internal Revenue Code of 1986,"
100 Stat. 2085, 26 U.S.C.A. 415, as amended.
The first increase is payable to all persons becoming
eligible on or after November 18, 1981. The increase is payable
for each ensuing twelve-month period or until the next increase is
granted under this section, whichever is later in accordance with
the following:
(a) For each person sixty-five years of age or older who is
receiving a pension not greater than one hundred eighty-five per
cent of the federal poverty level for a family of two persons, as
revised annually by the United States department of health and
human services in accordance with section 673(2) of the "Omnibus
Reconciliation Act of 1981," 95 Stat. 511, 42 U.S.C. 9902, as
amended, the board shall increase the pension by three per cent.
(b) For persons other than those described in division
(B)(1)(a) of this section, the board may increase the pension. Any
increase shall be determined by the board based on compliance with
the amortization period requirement of section 5505.121 of the
Revised Code. The board's determination shall be based on the
annual actuarial valuation required by section 5505.12 of the
Revised Code. If the board determines that an increase may be
made, the increase shall not exceed three per cent of the eligible
person's pension.
(2) No increase under this section shall exceed the limit
established by section 415 of the "Internal Revenue Code of 1986,"
100 Stat. 2085, 26 U.S.C. 415, as amended.
(3) The date of the first increase paid under this section
shall be the anniversary date for future increases. The pension
used in the first calculation of an increase under this section
shall remain as the base for all future increases paid under this
section, unless a new base is established.
Increases paid in years subsequent to the year of the first
increase paid under this section shall be paid to all persons who,
on the date that the increase is authorized by the board, are
eligible as provided in this section.
(C) If payment of a portion of a benefit is made to an
alternate payee under section 5505.261 of the Revised Code,
increases under this section granted while the order is in effect
shall be apportioned between the alternate payee and the eligible
person in the same proportion that the amount being paid to the
alternate payee bears to the amount paid to the eligible person.
If payment of a portion of a benefit is made to one or more
beneficiaries under "option 4" under division (A)(4) of section
5505.162 of the Revised Code, each increase under this section
granted while the plan of payment is in effect shall be divided
among the designated beneficiaries in accordance with the portion
each beneficiary has been allocated.
(D) The board shall adopt, and may amend or rescind, any rule
necessary to carry out this section.
Sec. 5505.28. (A) The state highway patrol retirement board
may enter into an agreement with insurance companies, health
insuring corporations, or government agencies authorized to do
business in the state for issuance of a policy or contract of
health, medical, hospital, or surgical benefits, or any
combination thereof, for those persons receiving pensions and
subscribing to the plan. Notwithstanding any other provision of
this chapter, the policy or contract may also include coverage for
any eligible individual's spouse and dependent children and for
any of the individual's sponsored dependents as the board
considers appropriate.
If all or any portion of the policy or contract premium is to
be paid by any individual receiving a service, disability, or
survivor pension or benefit, the individual shall, by written
authorization, instruct the board to deduct from the individual's
pension or benefit the premium agreed to be paid by the individual
to the company, corporation, or agency.
The board may contract for coverage on the basis of part or
all of the cost of the coverage to be paid from appropriate funds
of the state highway patrol retirement system. The cost paid from
the funds of the system shall be included in the employer's
contribution rate as provided by section 5505.15 of the Revised
Code.
(B) The board shall, beginning the month following receipt of
satisfactory evidence of the payment for coverage, pay monthly to
each recipient of a pension under the state highway patrol
retirement system who is eligible for medical insurance coverage
under part B of the medicare program established under Title XVIII
of "The Social Security Amendments of 1965," 79 Stat. 301 (1965),
42 U.S.C.A. 1395j, as amended, an amount established by board rule
not exceeding the basic premium for such coverage.
(C) The board shall establish by rule requirements for the
coordination of any coverage, payment, or benefit provided under
this section with any similar coverage, payment, or benefit made
available to the same individual by the public employees
retirement system, Ohio police and fire pension fund, state
teachers retirement system, or school employees retirement system.
(D) The board shall make all other necessary rules pursuant
to the purpose and intent of this section.
Sec. 5505.54. (A) During the period beginning on the
effective date of an election to participate in the deferred
retirement option plan and ending on the date participation
ceases, a member's monthly pension amount determined under section
5505.53 of the Revised Code shall accrue to the member's benefit.
To this amount shall be added any benefit increases the member
would be eligible for under section 5505.174 of the Revised Code
had the member, on the effective date of the member's election,
retired under section 5505.16 of the Revised Code.
(B)(1) The amounts contributed under division (A) of section
5505.15 of the Revised Code by a member participating in the
deferred retirement option plan shall accrue to the member's
benefit be credited as follows:
(a) Ten per cent of the member's annual salary shall accrue
to the member's benefit.
(b) Any amount of the member's annual salary that is in
excess of ten per cent shall be credited to the employer's
accumulation fund.
(2) The state highway patrol retirement system shall credit
to the employer's accumulation fund the amounts contributed by the
state under section 5505.15 of the Revised Code on behalf of a
member participating in the deferred retirement option plan.
(C) During the period beginning on the election's effective
date and ending on the date the member ceases participation in the
plan, the amounts described in divisions (A) and (B)(1)(a) of this
section shall earn interest at an annual rate established by the
state highway patrol retirement board and compounded annually
using a method established by rule adopted under section 5505.50
of the Revised Code.
SECTION 2. That existing sections 5505.01, 5505.03, 5505.15,
5505.174, 5505.28, and 5505.54 of the Revised Code are hereby
repealed.
SECTION 3. Sections 1 and 2 of this act take effect January
7, 2013, except that section 5505.15 of the Revised Code, as
amended by this act, takes effect one hundred and eighty days
after the effective date of this section and section 5505.01, as
amended by this act, takes effect January 1, 2015.
SECTION 4. (A) The Ohio Retirement Study Council shall study
and make recommendations regarding the authority of the State
Highway Patrol Retirement Board to adjust employee contributions
rates as provided in section 5505.15 of the Revised Code, as
amended by this act.
(B) Not later than ninety days after the effective date of
this section, the council shall prepare and submit to the
President of the Senate and Speaker of the House of
Representatives a report of its findings and recommendations.
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