Public Retirement & Social Security Programs-Joint

Retirement committee to order chair sees a quorum. If anyone wishes to speak for against the bill please sign in. If there are no objections were going to go out of the gym to order to accommodate some folks who have to go to other meetings. Mister chair do you have any comments. Good morning glad that of payment you're honest knows going away thank you yes Sir. Okay. Senator hamburger is going to have another meeting go to so what we're gonna do is I'm going to go first so that he can chair while I'm presenting and then Representative Evans is going to present his two Bills. Because he has another meeting go to as well and then we'll go down the order after that Senator Teague is informed me that he is putting an amendment on his bill so we will not be presenting that today. So. Any questions on any of that. Okay I'm gonna in turn control over to Senate hammer. Thank you represented one do you have anybody want to buy to the table to testify with you at this time. If you want to go ahead and have them come for. Yes Sir I would like to ask Mister Clint Rhoden with Arkansas teacher retirement to join me at the table all right Mr road if you would come for please Wallace come and represent war would you identify yourself for the record please. Yes Sir represent less worn district twenty five. Thank you all go ahead identify yourself please. Clint Rhoden Arkansas teacher retirement system. And what billion be presenting this morning Mr represent one house bill thirteen twenty six Convers thirteen twenty six if you would please and go ahead and Starch presentation as you'd like to. Thank you Mr chairman this is a teacher retirements bill it is mostly a technical corrections bill that they have been compiling since our last general session represent warrant limitations let me I'm sorry let me interrupt you do you have a amendment you want to tell I'm sorry interviewers it was at the top of the due to the snow and everything are a minimum did not get engrossed so I would like to ask that we adopt the amendment that was just to clarify some language so Without any. If. Share if you would like to adopt that amendment okay in member was that a motion searches feel. Are your motion center Chesterfield second. August second from Senator Teague and members of the four I take to vote on that The Amendment is actually attached to the bill. It is the first screen she. At the back of the bill if you want to just take a quick glance at. Let me ask you and I know we're going to get it in here this morning what what's the amendment do quickly I will let Mr Roden explain that a little bit better. Yes a. The Amendment is to section thirty five of this of this bill and it clarifies the way that we deal with the residue of refunds when a member's anti dropped the the language we had in there before you know we interpreted it as a bed in a particular way legislative audit look at it and said well you know we could interpreted a different way we didn't we're not gonna change the way we're actually doing it at a TRS in in getting back contributions and and he dropped balances upon the death of a member but this language just fixes the mask that center I just wanna members have a chance before you voted to adopt a motion so any any questions center Chesterfield. I have a question on. Well done look at the green street could you tell me why you're increasing the required minimum distribution nation seven and I have to seventy two. I think I can answer that there is a it's called the secure act that was the federal legislation. It increased the age at which you're required to take distributions from seventy and a half to seventy two so we're just putting the state in line with that thank you thank you Mr yes ma'am. Our members any other questions. This is a motion to adopt the amendment is presented simple majority all in favor say aye. Any post. All right very good your motion is adopted okay go ahead explain the builder through please. Okay. This is a teacher retirements bill in this mostly a technical corrections bill that they've been calling compiling basically since our last General Assembly. it streams live streamlines teacher retirement walls eliminates obsolete language and codifies existing practices and the board's intent. I want to make sure that a point out this bill has no effect on the benefits or operations of teacher retirement there's minimal cost to the system. There are like thirty seven different sections to this bill. I'm not going to sit here and go through each section I know you pass the a chance to review this I will be glad to answer any questions on any of those sections to clarify Senator Chesterfield just had one and so if you have any other questions on any of the sections but this is just basically. Teacher retirement going through things as they come across the two year period on a we need to fix that so. And that's what they've compiled here. Okay. All right so basically it's a cleanup bill totally okay And I want to issue just for this bill and for other bills going forward and for that we're gonna be looking at more Clint. With what you're mechanisms that you've used to communicate to the teachers regarding the retirement bills that are before since morning so we know that they have been well communicated and The date of its been verbalized and what bills are before she's mourning yes absolutely Senator of. And thank you for the question so we started this package you know way back in the summer of this year it's a lot a lot earlier than we have in the past a lot of was due to the town hall meetings that we had so everyone of these bills have been in the public record for the board meetings and discussed at every board meeting pretty much since last April they're included on our legislative website that describes in detail all the the workings of these bills as well as during the legislative session we send out a newsletter to about twenty five thousand of our members that are currently signed up for that that also describes this so okay that's all right a questions from members for goat senator but may I want to jump a piggy back on on that. If you're not already if you haven't been on retirement committee. I get that newsletter and I think each of you will start getting it if you haven't already. I I've been very proud Senator Chesterfield nodding her head. As we went across the state it was really encouraging to get to interact. With so many people and hear their feedback but in return I think the people felt like okay they're coming out talking to us. And we realized there was a line of communication. That had begun between the legislature directors of the systems and the members. So Senator hammer and I have talked in it's our plan to do some kind of. Periodic meeting out in the state maybe not as many as we did before but at least start doing something on a periodic basis so our members feel like we're informed they're coming they're talking to us we know what's going on with our plans. So and I've been very proud not only of the teacher retirement but all the system sitting behind me I think they've done a really good job of communicating to their members what's going on in it. In contrast to the last General Assembly where this room was full you can see that your emails you're not you're not being flooded with emails and the room is not full I think we're I know we're in Kopet situations but still I think we've we've done a much better job these guys have of communicating so I just kudos to these guys okay thank you a written question will take center Chesterfield motion on page thirty five or under section thirty five. On the Belushi your explanation. Would you explain number one. Of your explanation on the blue sheet on section thirty five. Specifically one of the worst is further reduced by amounts received from the T. drop account in the form of lump sum or annuity payments. You okay. I'll so. Let me start with just at the beginning of essentially what is guaranteed as a revenge for the benefit for a teacher that retires out of a curious members to make contributions into the system those contributions it into an account that's only that's bears if they die before they draw enough benefits to match that number amount of contributions that they make they get that money back are they get the balance back that's what we're talking about here is the residue of the member contributions when a member goes into T. drop that contribution but it starts getting documented by their T. drop deposits as well and this is just the language that clarifies that in the end you're at least going to get your contributions back it may be as part of a T. drop ballots and maybe the residue of your contributions but in the end you're guaranteed to get one hundred percent of what you put in plus interest. Okay from the part that they put it on the part by putting that and next this is just clarifying the math behind that calculation okay all right any questions remembers. Read a motion direction or just feel to accept or to a. To a do pass as amended house bill thirteen twenty six the correct and second got a second from Representative Maddox any questions to the motion second. All favor say aye. Post all right thank you represent we passed a bill and regulations. Thank you Mr chairman thank you Committee. Okay. Representative and you're recognized to present your to bills. You would identify yourself. My colleagues Representative evans' District forty three. proceed with your real thank you sure appreciate the flexible gender this morning colleagues and mature to replace rod asked road state table please. This the first bill I've got for this morning's house bill thirteen thirty nine teacher retirement employers compensate their employees for accumulated unused sick leave. What this policy does provide the financial incentive to decrease the use of sick leave obviously during their employment. The system is always included that compensation for cumulative sick leave as part of the member salary. It's been allowed to be a part of the final average salary for all A. T. R. as members. The purpose of the bills to repeal some language in the wall that has never been enforced by the teacher retirement system. The repealed language if enforced would result in some members not having compensation for accumulated unused sick leave included in the calculation of their final average salary. So in short compensation for unused sick leave is a taxable part of their salary you should be included in the final average salary at retirement of the system's actuary found that this bill would have no financial impact the retirement system cost or with the systems amortization period I'll be happy to answer any questions. All right we have any questions of the Representative evinced. All right. I see no question I'm sorry. There is. All right Senator Teague you're recognized. Try again good morning. So this shouldn't this does the teacher retirement teachers anyway I no Sir at five dollars okay this is a direct benefit to their teachers thank you yes. Senator Chesterfield you're recognized. Thank you Mr Sheeran thank you Representative Evans for taking my question. A it says compensation I'm on thirty one on page one compensation for cumulated unused sick leave under this section shall not be used by the Arkansas public employees retirement system in the calculation of final average compensation. I thought were saying just the opposite a minute ago it could be used by the language doesn't seem to agree with that. The seat of a line thirty five line thirty. Well I started thirty one. Russell line thirty one is taking that out. This road correct if I'm wrong this is still part of the so we're on thirty thirty nine which is the Arkansas. Why is it saying the Arkansas public employees retirement system in the calculation what does it have to do with anything. Because you're talking about a TRS but in line thirty five we're talking about eighty eight purposes figure out what how how is it working with that yes yes senator that that's just the way to the current law is written this bill is only dealing with teacher retirement system so this is this law is still in effect as it has always been as far as a person goes. Okay yes so we're trying to understand if I look at thirty one as just compensation accumulated unused sick leave under this section shall not be used by that. And then you strike out the Arkansas teacher retirement system in the calculation of final every salary right is that what we're taking yes you will not be counted in the. Correct we are taking out the provision that you. Could not be used for teacher retirement and now allowing the unused sick leave to be a part of the calculation of the final average salary. So you're not you're not following me and that I think that this is confusing. I'm looking at the line as just compensation for cumulated honest you sick leave under this section shall not be used by the so if you're if you're gonna be able to use and why is it saying you're not going to use the language to me is confusing. The I'll try to clarify but it's saying it can't be used by the by a person or can't be used by eight yes the ones that have to do with us well we we used to be included in that until we repeal this lineup of okay yes okay we're trying to repeal ourselves out of out of the out of this section of the in but it can be used you can can continue to be used T. R. S. yes cannot be used in paper that is correct correct. What is that hurting those who would be able to use their time working in the state and then going into the education field. Is it going to hurt them. Because you know we have five years we can use to count toward our retirement so is it going to her. So essentially it's the way that a tourist treats all salary now is that if you aren't salary that's taxable we if we can include that in your teacher retirement benefits. And this section was just a conflict with that so that's what we're going to repeal that it's it's contradiction to what we actually do in practice. This seems contradictory what you're saying but I'm not getting it but I'll take your word for it okay thank you I guess. All right do we have any other questions. They are at. Are you close for your motion Marcello's for the bill and motion to pass all right the motion to pass we have a second. All right any other discussion. All those in favor say aye. Any opposed same sign. Your motion carries a bill has passed. All right if you would proceed to your next bill. Thank you sure colleagues house bill thirteen forty is simply just about fairness occasionally very rare but occasionally it has happened where an employer fails to accurately report service earned by a member of teacher retirement. Most of these are just human good faith there was no harmful intent that was done. Unreported or under reported service is often not discovered until the time that the eighty R. S. member applies for their retirement which could be certainly a number of years. This could very well be past the five year look back period that currently prevents eighty R. S. from correcting the members service record after five years of past. Purpose of the bill is to change the law to specify that went unreported or under reported services well documented and undisputed the five year look back period would not apply. The bill also contains a technical correction that clarifies the purpose of converting contributory service into non contributory service the case members contributions on their salary that was due to the heirs. Certainly it would be the preference of a T. R. S. that if they on reported or under reported you're a service was not reported that the member and the employer would be able to make that contribution back into the system. If they were able to do that then that would count as contributory service however in the event current times sure the employee not be able to make the contribution for the under reported or unreported service they would still get their your service counted towards the retirement it would just be a non contributory year without any penalty. The system's actuary found that the bill has very little if all any financial impact upon the a to your system to be happy to answer any questions. do we have any questions for represented Evans on this bill. All right seeing none are you closing your bill close to the college thank you very much I believe these two bills this morning are are definitely things that positively impact teachers and in their retirement I appreciate a good vote I move a motion to pass we have a motion we have a second all right second from Senator Teague. Any discussion. All those in favor say aye. He opposed same sign. Congratulations represented that injury will not last. All right. We'll go back up to the top here. we're going to pass over St takes bill. A Representative Smith. Please identify yourself for the record. Stu Smith state Representative district sixty three you're recognized to present your bill thank you Mr chairman like to also requested Mr Clint Rhoden. Remain as a witness for me a you will do that thank you for. H. B. twelve seventy nine is a disability retirement determination bill and the purpose of this bill is to create a rebuttal presumption that if the members qualify FOR Social Security Administration benefits then they would also qualify for a TRS disability retirement benefits. Well the actual decision will still be made by the A. T. R. S. medical committee. It also re organizes the language of the A. T. R. S. disability retirement law section for increased clarity and the deadline associated with a disability retirement process or more clearly stated. Finally a one time opportunity for a second review was added if a member is denied eighty R. S. disability benefits by the medical committee provided additional medical documentation is provided. This bill is needed in order to add some additional fairness and equity to the disability retirement approval process any favorable determination letter from the SSA has been an afterthought up to now. Currently if the members denied benefits by medical committee they must return to work in order to file a new application for disability retirement often as in the case with degenerative diseases this is not practical. One time second review for members that can provide additional medical records adds furnace this process in the system's actuary found that this bill has a small cost impact on Arkansas teacher retirement system. All right do we have any questions. Per Representative Smith. All right seeing no question oh I'm sorry. All all right we have a motion we have a second. Any discussion. All those in favor say aye. Any opposed same sign. Your motion is carried Mr Smith congratulates much. Representative Maddox. You're recognized percent your to bills. Please identify yourself for the record. Thank you Mr chair John Maddox and I would also Westminster road states table please I have a feeling he'll stay with you thank you for. The chairs reading how you please proceed proceed I'll proceed with thirteen nineteen yes Sir thank you. Thank you members of committee currently service required in any of the state versus reciprocal retirement systems can be used to satisfy the eligible the eligibility requirements for retirement under the eighty R. S. currently TRS requires five years service in a reciprocal system in order for a higher reciprocal system final salary to be fully used in the computation of the benefit the purpose of this bill is to replace the current complicated formula that involves blending service rendered in a reciprocal retirement system with eighty or a service to calculate a retiree's finalized average salary under this bill members still get the full benefit of the reciprocal service credit but they only need to be a member of a reciprocal system for two or more years to get the benefit of a higher final average salary from a reciprocal system this bill also resolve a conflict between reciprocal systems in which concurrent service occurs by allowing eighty R. S. to refund contributions if the member forfeits eighty or a service that is concurrent with another reciprocal system. This bill is needed to improve the administrative process used when a member service in both A. T. or S. and one or more reciprocal retirement systems the complicated formula was adopted at a time when a terrorist a three year final average salary is even more complex now that A. T. R. S. as a five year final average salary this bill protects eighty yards from him to play in and having to pay an inflated retirement benefit for small amounts of reciprocal service and this bill also resolve the conflict in the law about running a tourist refund contributions in the case of forfeited concurrent service credit the system's actuary found that this bill has little or no material financial impact on a T. R. S. and I'd be happy to take any questions. Okay do we have any questions for represent Maddox. Okay. Represent prior recognized thank you Sir Representative John yes the present time how many years is required five. Operate your is this five years as my understanding is this will change it to to. Is there a yes for reciprocal service yes. Reciprocal yes thank you. All right do we have any other questions. All right seeing okay Sir. Senator Chesterfield I want to clarify. You're recognized this is for reciprocal service only right between like apers an eighty R. S. yes ma'am this is not. you have to be a member of the system to be vested how many years now. Well eighty arses five years five years yes so we the best in the investment theory to steal the sign. But in order for instance and I had five years with a T. R. S. and I had two years with papers I could combine those two and if I reached the age where it doesn't matter. Right then I can use both of those is that what you're saying all right thank you per particularly senator this is about using the higher final average salary from the two different systems as long as you have two years and reciprocal system will honor that. Five. Yes my. All right any other questions. Represent Maddox are you close for your bill I'll close my bill not make a motion to pass we have a motion and a second by Senator Chesterfield. All those in favor say aye. Any opposed same sign. Resolutions represent Max your bill has passed and you're recognized to present your next bill. Thank you. Members this is HB thirteen twenty regarding employer reporting as all of you know all employers that participate in a T. R. S. remit their required contributions on a monthly basis the deadlines and penalties are currently specified in eighty or its rules the purpose of this bill is to remove employee reporting deadlines and penalties from the law as they're already as they are already required in the George rules if the board says to modify these deadlines and penalties the rulemaking process in the AP a is more efficient this bill also requires all employers to submit their monthly contributions using electronic funds transfer this bill is need to increase division operations all employers should transmit their monthly contributions to a T. R. S. electronically electronic transfers the most efficient method for a tourist to receive regular employer contributions most days you're assemblers already use this method the system's actuary found that this bill has no meaningful impact for no material in a financial impact on the TRS. I'll be glad to answer any questions. Okay do we have any questions okay center Chesterfield you're recognized. As we know the greed is not always work. so is there a mechanism that you can put in place should the agreed that one uses to submit this information S. and the last thing that we've just gone through is there a mechanism in place so that the district will be held harmless should they be on able to provided electronically. Yes yes center there is a waiver process and a built into this system it's essentially the same system that apers currently uses see I don't know what A. previews member of eighty all right right right but yes I mean we're always going to work with our employers in order to get rid of around electronic problems etcetera this is just. Brings the rest of a man that have just been slow to do it voluntarily to you know. Adopt this more efficient process you know each one of them has the capability of using because of yes any and and there is a there is a mechanism built into this new section of a law that allows the district if they'd had do not have the electronic capability of doing this thank you Bob for a waiver that we can get around it with the heart thank yes. Okay. Represent pair you're recognized. Thank you Mr chairman of how many delinquent systems do we have. A different. Can you clarify their your question Willand is far as own on making contributions. Or do we have any that are currently battling. Now we we have very few members are very few employers that actually get crosswise with not making contributions in a timely manner most of the time they are simple clerical errors you know good faith type of training new staff come in you know somehow we missed the deadline by a few days and you know this is just the stake in the law that helps us enforce that but for the most part as long as we get the system gets the contributions of mentally you know we can resolve these issues very easily so the end of last year we didn't have any that we're dealing with. None that are delinquent okay you know they're there we often have ones that are late. but again as long as the it is a good faith error we often you know ninety nine percent tops waive the interest on that and just laws we get our contributions but this this is an enforcement mechanism for that in case we we can't. All right any other questions. All right Sir Chesterfield you're recognized. All right we have a motion do pass do we have a second all right Mark Perry on erection Perry on the second any discussion. All those in favor say aye. Any opposed same sign. Graduations represent Maddox year second bill is passed thank committee. Thank you Mr Roden for being here today in the work that teacher retirement does force thank you committee Committee let me give you a couple of the items. We're now through the three of our systems next week we will be taking up the papers bills and we will be going back and getting the one Lotfi bill that had to have some work done on it so as of next week we will have all of the system bills. Done. So at that point we will start going to the member Bills. So we're making progress if you have any questions let us know we'll start getting the member bills into the process and the I think we're making good progress here so if you have any questions please come see Senator camera myself. Anything else to come before the committee. If not we stand adjourned.