S.B.
267
127th General Assembly
(As Reported by S. Health, Human Services & Aging)
Sens. Faber, Seitz
BILL SUMMARY
· Distinguishes the two existing sub-groups in the Public Employees Retirement System (PERS) law enforcement division by creating a public safety officer division.
· Includes in the PERS public safety officer division officers whose primary duties are other than to preserve the peace, protect life and property, and enforce Ohio laws and all Hamilton County Municipal Court bailiffs.
· Permits the PERS Board to establish a program under which a PERS member may convert up to five years of credit for non-law enforcement service to credit for service as a law enforcement or public safety officer by paying not less than 100% of the additional liability resulting from the conversion.
· Provides that the member contribution rate for PERS law enforcement officers is the rate established for PERS public safety officers plus an additional percentage, which is initially 1% of members' earnable salaries but may be increased by the Board to not more than 2%.
· Revises the penalties assessed against employers who fail to timely transmit to PERS employee retirement contributions or required reports of those contributions.
CONTENT AND OPERATION
The Public Employees Retirement System (PERS) has special retirement and benefit provisions for members who are law enforcement officers (see COMMENT). Current law distinguishes two groups within the law enforcement division. The groups are composed of the same state, county, and township officers,[1] but are divided by the primary duties of the officer. Officers whose primary duties are the preservation of the peace, protection of life and property, and enforcement of Ohio laws qualify for a normal retirement benefit starting at age 48 with 25 years of service. Those officers whose primary duties are other than to preserve the peace, protect life and property, and enforce the laws of Ohio are eligible for a normal retirement benefit starting at age 52 with 25 years of service.[2] Under current law, a law enforcement officer's group, and, therefore, retirement eligibility, is determined at retirement, rather than during actual service.
(R.C. 145.01(YY) and 145.33(B))
The bill creates the PERS public safety officer division to distinguish between the two law enforcement officer groups. Under the bill, officers will be determined to be in the law enforcement or public safety officer division at the time of service rather than at retirement. Those who will be eligible to retire at age 48 will continue to be in the law enforcement division. Those who will not be eligible until age 52 will be in the new public safety officer division.[3]
Under current law, no specific statutory provisions exist to determine retirement eligibility at age 52 for a member who has service both as an officer whose primary duties were to preserve the peace, protect life and property, and enforce the laws of Ohio (law enforcement officer) and service as an officer whose primary duty was other than to preserve the peace, protect life and property, and enforce the laws of Ohio (public safety officer). The bill specifically permits a member to combine service as a public safety officer and service as a law enforcement officer to meet the 25 years of service requirement necessary to retire at age 52.[4]
The bill makes a technical change to continue current law's requirement that, to retire at age 48, the member must have 25 years as a law enforcement officer whose primary duties were to preserve the peace, protect life and property, and enforce the laws of Ohio. It makes clear that a member may not combine public safety officer service with law enforcement service to meet the requirements necessary to retire at age 48. An additional technical clarification is included to continue current law that allows a member to receive an annuity for non-law service that is in addition to the 25 years of service necessary to retire at age 48 under the law enforcement division or age 52 in the public safety officer division.[5]
(R.C. 145.2914)
The bill permits the PERS Board to establish a program under which non-law enforcement service is treated as law enforcement or public safety officer service for purposes of determining retirement benefits and eligibility. For each year of service credit converted, the member is to pay an amount determined by the PERS Board that is not less than 100% of the additional liability resulting from the purchase of that credit. The member must agree to retire within 90 days of the conversion.[6] The number of years a member may purchase under this program is limited to five.[7]
(R.C. 145.49)
Current law provides that law enforcement members contribute 10.1% of their salaries to PERS (see COMMENT, below). The Board is authorized to calculate employee contribution rates separately for officers whose primary duties are other than to preserve the peace, protect life and property, and enforce Ohio laws. The current rate established by the Board for all law enforcement officers is 10.1%.[8]
The bill provides that the PERS Board may calculate contribution rates for PERS public safety officers. Under the bill, the contribution rate of PERS law enforcement officers is to be the rate established by the Board for public safety officers plus an additional percentage that is to be initially 1% and may be increased to no more than 2% of the officers' salaries.[9]
(R.C. 145.47)
Each public employee is required to contribute a percentage of the employee's salary to PERS. Each employer of a covered employee is required to deduct that contribution from the employee's salary and transmit a warrant or check for the total amount to PERS. The employer is also required to submit a report of the contributions to PERS. The bill revises the penalties PERS is required to impose on an employer who fails to timely transmit a report or employee contributions.
Under current law, PERS is required to impose a penalty of 5% of the total amount due in a reporting period if the report or employee contributions are received later than 30 days after the end of the reporting period. Interest is to be charged on the penalty if it is not paid within three months.
Under the bill, unless the PERS Board adopts a rule establishing a different penalty, penalties for failing to transmit a report or contributions when due are as follows:
(1) At least one but not more than ten days past due, an amount equal to 1% of the total amount due during the payment period;
(2) At least 11 but not more than 30 days past due, an amount equal to 2.5% of the total amount due;
(3) 31 or more days past due, an amount equal to 5% of the total amount.
The bill authorizes the Board to adopt rules to establish penalties in amounts that do not exceed the statutory limits. The bill continues current law that permits PERS to set the interest rate on penalties that are not timely paid, but requires that the interest on the penalty be charged if the penalty is not paid within 30 days (rather than three months under current law). The bill also permits an employer to make an electronic payment for the contributions, in addition to a warrant or check for the contributions.
COMMENT
The following chart shows the differences in contribution rates, retirement eligibility, and benefit calculations between regular PERS members and members in PERS law enforcement. Under the bill, the provisions for PERS law enforcement officers whose duties are other than to preserve the peace, protect life and property, and enforce the laws of Ohio largely apply to public safety officers.
Current Law |
The Bill |
|||
PERS Feature |
Regular PERS Members |
PERS Law Enforcement
Officers whose duties are to preserve
the peace, protect life and property, and enforce the laws |
PERS Law Enforcement
Officers whose primary duties are other than to
preserve the peace, protect life and property, and enforce the laws |
PERS Public Safety
Officers division under the bill |
Employee Contribution Rate |
10% of earnable salary |
10.1% of earnable salary[10] |
10.1% of earnable salary |
Determined by the PERS board |
Employer Contribution Rate |
State--14% of earnable salary |
17.40% of earnable salary[11] |
17.40% of earnable salary |
Determined by board but not to exceed 18.1% |
Regular Retirement
Eligibility |
At any age with 30 or more years of service |
Age 48 with 25 years of service |
Age 52 with 25 years of service |
Same as previous column |
Early Retirement
Eligibility |
Age 60 with 5 or more years of service |
Any age with 15 or more years of service, but
payment of benefits is deferred until age 52 |
Any age with 15 or more years of service, but
payment of benefits is deferred until age 52 |
Same as previous column |
Disability
Benefit Eligibility |
If membership commenced prior to 7/29/92, younger
than age 60 with at least 5 years of service |
For on-duty illness or injury, at any age,
regardless of length of service |
For on-duty illness or injury, at any age,
regardless of length of service |
Same as previous column |
Regular Retirement Benefit
Formulas |
The greater of: |
2.5% FAS x years of service through 25 years of
service, plus 2.1% FAS x years over 25, not to the exceed 90% of FAS |
2.5% FAS x years of service through 25 years of
service, plus 2.1% FAS x years over 25, not to the exceed 90% of FAS |
Same as previous column |
Early
Retirement Benefit Formulas |
Less than 30 years of service, or under age 65,
benefit is reduced 3 to 25%, depending on age and years of service |
Under age 62 with at least 15 but less than 25
years of service, 1.5% FAS x years of service |
Under age 62 with at least 15 but less than 25
years of service, 1.5% FAS x years of service |
Same as previous column |
Disability
Benefit Formulas |
If a member
prior to 7/29/92, the greater of: |
Same as
Regular PERS |
Same as
Regular PERS |
Same as previous
column |
HISTORY
ACTION |
DATE |
|
|
Introduced |
12-18-07 |
Reported, S. Health, Human Services & Aging |
04-03-08 |
S0267-RS-127.doc/jc
[1] Both groups include
the following officers: a deputy
sheriff, township constable or police officer in a township police department
or district, drug agent, municipal public safety director, department of public
safety enforcement agent, natural resources law enforcement staff officer, park
officer, forest officer, preserve officer, wildlife officer, state watercraft
officer, park district police officer, conservancy district officer, veterans'
home police officer, special police officer for a mental health institution,
special police officer for an institution for the mentally retarded and developmentally
disabled, state university law enforcement officer, municipal police officer,
house sergeant at arms, assistant house sergeant at arms, regional transit
authority police officer, or state highway patrol police officer.
[2] Hamilton County Municipal Court bailiffs are included in this group.
[3] Neither existing law
nor the bill specifies how this distinction is made. It appears, however, that the employer determines which officers
have as their primary duties preserving the peace, protecting life and
property, and enforcing Ohio laws.
[4] According to Deborah
McCarthy, PERS Assistant Government Relations Officer, allowing a public safety
officer to retire at age 52 by combining public safety officer service and law
enforcement service is current PERS practice (telephone conversation with
Deborah McCarthy, January 7, 2008).
[5] For instance, if a
member has 25 years of law enforcement service and 5 years of non-law
enforcement service, the member may retire and receive a law enforcement
benefit based on 25 years of law enforcement service and an additional annuity
based on the 5 years of non-law enforcement service.
[6] If the member fails to retire, PERS is to
cancel the conversion and refund the payment to the member.
[7] A member may
purchase only part of the service, but may not exceed the limits imposed under
26 United States Code 415(n). The
Internal Revenue Service places limits on the type and amount of service credit
purchases that may be made under a qualified government plan such as PERS.
[8] PERS, "OPERS Employer Notice," June 19, 2007 (available online at: https://www.opers.org/pubs-archive/employers/notices/2007/EN-Certification-Local-Rates-2008.pdf).
[9] Current law
unchanged by the bill provides that the Board may establish employer contribution
rates on behalf of all officers in an amount that cannot exceed 18.1% of the
officers' salaries.
[10] Under the bill, the
employee contribution is to be initially one per cent higher than that paid by
PERS Public Safety Officers, but not to exceed two per cent higher than that
paid by Public Safety Officers.
[11] As under current
law, the contribution is not to exceed 18.1% of employees' earnable salaries.
[12] With some
exceptions, final average salary is the average of the three years of
contributing service in which the member's earnable salary was highest (R.C.
145.01).