Public Retirement & Social Security Programs-Joint

let me call this meeting to order. Chair sees a quorum. Did Everybody hear that? OK. All right. So we've got Some bills to consider today that have come back and so, um. I think it'll be the uh representative Warren show. They're all representative Warren's bills. So, uh, Mr. Chairman, you're recognized. I would like to on the uh I've got, uh, House Bill 11181. I would like to for these first two bills, uh, I would like to Uh, ask, uh, Director from Locky to please join me and anyone he would want from. His organization Can you put your microphone Is that better? Yeah, OK, thank you. If you would state your name for the record and then you're recognized to present. Good afternoon, David Clark. OK, so, House Bill 1118 is a very simple bill. There's a portion of the fire and hazard insurance premiums that's collected and set aside to help fund the retirement plans for our firefighters and police. Latvia has taken over the majority of the local retirement plans, uh, for firefighters and police. There are only 31 local plans being managed locally and falling under the scrutiny of the pension Review Board. Both the pension review board and DFNA have agreed to shift the administration of the allocation of the tax received from the pension uh review board to DFNA. There's no fiscal impact, and no opposition that I know of, and there is an emergency clause, uh, with this bill. I'll be glad to entertain any questions, right? Uh. Members Any questions on a presentation. Senator Love, you are recognized. Thank you, Mr. Chair. So this won't, this won't impact any of the benefits that are being administered, will it? No impact on the benefits. This is just a An appropriation. Of funds that are used for retirement, uh, benefits for policemen and firemen. The allocation is going to be handled by DFNA instead of the pension review board. OK. All right, thank you. Thank you, Mr. Chair. Seeing no other questions. Um I am closed for my bill and I would make a motion to pass. Oh Actually, sorry, I got hit myself. Is there anybody here signed up to speak for or against, seeing none, you're recognized to close. I am close for my bill and, uh, make a motion do pass. I hear motion, see you have a second, have a second from Senator Love. Any discussion on the motion? See none all in favor? And he posed. Motion Cars. Congratulations, you've passed the bill. We're going to House Bill 1119. Thank you, Mr. Chairman. Uh, this bill is adjusting the time when payments and reports, uh, from employers. In the system are considered delinquent. Instead of a 10 day grace period, employers will be given 5 calendar days after the due date to make payments to Lay and submit their reports. The longer grace period in statute was due to reports being all paper and the regular mail system. Employers now have access to lot fees employers. Reporting portal. Uh, this will allow for prompt action from the board at the regularly scheduled board meetings. In the past they had to delay action until the board meeting. Uh, the following board meeting. Now they get the information and time with this, they'd be able to act right when this happens, so, um, There is also an emergency clause on this bill making it have an effective date of July 1st, 2025. I'll be glad to entertain any questions, any questions from the committee. Saying none, sitting by. want to speak for or against. Seeing none, you recognized close. I am close for my bill and I would make a motion to pass. I would entertain a question if he's still. Did you have a question, Senator Love. Thank you, thank you, Mr. After, after looking at it, so the employee, how many employees are we talking about this will impact? I'll let my buddy uh answer that one. We have a, a total of 557 reporting locations, so in the actual impact to the ones that continually are late, month after month after month is running less than 5 locations each month, uh, but that's after multiple phone calls, emails, prompting, trying to get, you know, the location to comply. The majority of employers do what they need to do and they report by the 10th of each month and pay on time. This is one of those cases where we have a handful of locations that are just continually a bad actors, but the majority of people comply. OK. And I'm assuming I'm, I'm trying to look over this. Is there, is there a penalty when they, when they're When it's delinquent? Yes, sir, uh, whenever whenever the location is either laid on their payment and or reporting when they hit the 21st of the month, then they move into a delinquent status, and we have to have the board declare the location delinquent, then we notify the treasurer's office to withhold local revenue sharing until they become compliant, then the monies are released. OK, all right. OK. Thank you. Thank you, Mr. Chair. Thank you. All right. Uh, we have a motion. Do I have a second? I got a second. Any discussion on the motion. Sing none, all in favor. I And he opposed motion carries. That takes us to House Bill 1207. This time I would ask the director of APRs, uh, to please join me at the table and if she has anybody on her staff, I would ask them to join me as well. Good afternoon, if you would state your name and position for the record. Amy Fetcher, director at APRs. Thank you. Represent you're recognized to present. Thank you, Mr. Chairman. Uh, this is more of a technical correction bill. Uh, it has two main components to it, uh, first, it deletes all referenced to uniform employee, uh, in the statute and replaces it with state police officer. Uh, secondly, it changes the age limit for dependent children of state police officers killed in the line of duty from 22 years old to under 23, uh, years old. Uh, some parts of the statute or the code already have that reference to under 23, so this is bringing the rest of the code into compliance, uh, with what's already been done with the majority of the code. So And there's no fiscal impact to this. So Just as far as a question, state police officer obviously is. Arkansas State Police exclusively, even if it was formally referred to as uniformed employee. So it We're talking about the same folks, right, uniformed employee is not defined in code. And so that way it's more specific. I, I guess. Is there anyone outside of the Arkansas State Police that currently has retirement benefits that this would exclude by defining it as state police officer. Any questions from the committee, Senator Love? You're recognized. I'm going to draw your attention to the page 2, I guess is section 3 and we're we're striking through quite a bit of. Of language In regards to to concerning the calculation of a benefit payable as they were determined amount under this tier 2, we're, we're striking quite a bit of language. Can you tell me the impact of Of striking this language. You would state your name for the record, Laura Gilson, general counsel Apers recognized. So the way that the bill is written, it does appear that a lot's being stricken. It just shows the two subdivisions that are, that are being stricken, C and D and, um, actually this is to make it consistent with tier one, that language was stricken in tier one several years ago, and this is one of the things that we caught and, and said, you know, we need to administer the, they are being administered the same way. We need the, the law to reflect that, so. That that's what it's for, consistency. So, so what is it, but what is the impact of striking this language, I mean, I, I understand that you, you're trying, I guess bringing parity between tier 1 and tier 2, what, what was the impact there's actually there's no impact in the way it's administered at all. So all, all that was needed to properly administer, um, the redetermination of benefits was A and B in that subsection. C and D was language that's just obsolete and it was removed from tier one, like I said years ago, and we caught it and it's like this is. Technical correction. So I don't know if that addressed your question or not. OK. OK. All right. Thank you. Thank you, Senator. Uh Representative Rye, punch your button. Mr. Chairman, question for y'all, uh, on the 2nd page, it mentions 23 years old, which I think that means that if a, if a student or a child is in college or two-year college, whatever, it goes to 23 years, but The 18 years of age is mentioned in, in the second paragraph. And also a 23 years in the second paragraph. Can you explain that just a little bit? Yes, sir. Currently, um, statute is if they are in, um, in college, they can be paid till age 22 or in some areas it says until the end of their, um, 23rd year, um, but if they're not in college, it just goes to age 18 currently 23 actually is the cutoff date, even if they're in college. Yes, sir. OK. Thank you. Alright. Thank you, Representative Rye. So you know their questions. Representative Warren, you're recognized to close. I am closed for my bill, and I would make a motion to pass. So again. Go ahead. Any anybody from the audience want to speak for or against this bill. Seeing none. I'll take your motion now. I make a motion to pass and I would ask for a good vote. I, I hear motion. I see a second. got a second? Any discussion on the motion? A none, all in favor, I? Any opposed? Congratulations, you've passed your bill. Takes us to House Bill 1208. You are recognized. To present Thank you, Mr. Chairman. House Bill 1208 affects the collection of overpayments to members of the Arkansas State Police retirement system and the Arkansas judicial retirement system. Arkansas code currently provides the ability for Arkansas public employee retirement system to recoup overpayments made to participants of Apers through an offset to state income tax refunds. House Bill 1208 amends these sections of code to extend that ability to any. Overpayment made, uh, to participants in the Arkansas judicial retirement system and Arkansas State Police retirement system. The actuarial study determined the provisions of this bill will create administrative efficiency and will not impact the benefits paid to the participants of either of those, uh, systems. You've heard a presentation. Are there any questions? Saying none Is anybody From the audience which to speak for or against. See none representative you recognized clothes. I am closed for my bill and I would make a motion to pass. motion, I have a second. Is any discussion on the motion? Say none. All in favor, I. And he posted Motion carries. Congratulations, you've passed your bill. House Bill 1209. Uh, the proposed legislation, uh, here in House Bill 1209, uh, Ames, uh, To amend guidelines regarding the subjection of annuity rights, uh, to legal processes and to provide a mechanism, uh, for correcting errors within the Arkansas judicial retirement system, uh, including overpayments and underpayments, uh, key provisions, employers may set off claims against a member retiree, or beneficiary arising from embezzlement or fraud. Number 2 courts may order a retiree's monthly benefit to be paid into the court if the retiree is willfully noncompliant with child support obligations and then 3, the executive director of the Arkansas Judicial retirement System is authorized to correct errors and adjust payments to align with the actuarial equivalent of the correct benefit. And there is no fiscal impact with this bill. Right, I actually have a question on this. OK. Um, so, You, uh How is it handled now? like. We're, we're about to pass a law that says that you can. Basically, I guess garnish wages or if there's some sort of crime being committed embezzlement and that sort of thing. Do we not already have this authority without this? We do not with the judicial system, we do an APRs, um, and so we took this to the, the board of trustees for the judicial retirement system, and they were in favor of making this, um, the same as in the acres plan for the judicial plan. So this mirrors the Aper's language currently and, and is this the same? I don't know, you, you probably don't know the answer to this one and all the other systems, or is this, was this just unique to the judicial retirement system. Their 3 systems are ARs, uh, Arkansas State Police and Arkansas judicial retirement system. So, so for what you do, state police. It was mirrored language and apers and state police and we're just adding this language to the judicial branch, OK, um. Senator Tucker. You are Recognized. Thank you, Mr. Chair. I'm assuming y'all communicated with the judicial council about this and they're, they're good with it. Yes, we have. OK, and they're good with it? Yes. OK, thank you. Seeing no other questions, is anybody sign up to speak for or against. Seeing none, you recognized clothes. I am close from my bill and I make a motion to pass a motion, if I have a second? I've got a second. Any discussion on the motion? See none, all in favor, I. And he opposed. Motion carries Congratulations, you've passed House Bill 1209, House Bill 1210. You're recognized. Thank you, Mr. Chairman. House Bill 1210 affects the reimbursement of administrative expenses for the Arkansas State Police retirement system and the Arkansas judicial retirement System. Arkansas public employees retirement system, uh, provides administrative services for itself as well as these two systems and there is reimbursement to APERS, uh, for those services, but it is not included in Arkansas law. House Bill. 12:10 defines a reimbursement formula and would amend various sections of code to document it. So right now there's just nothing in the code saying how the reimbursement for their services to these two plans, uh, is calculated this will put it in code. Her presentation, are there any questions? Sing none. Is anybody here to speak for or against? Measure Saying none, you're recognized to close. I am closed from uphill. I make a motion to pass. Emotion In a second, uh. Any discussion on the motion. Say none. All in favor, I, I. Any opposed? Motion carries. Congratulations, you've passed House Bill 1210. You recognize to present House Bill 1211. Thank you, Mr. Chairman. House bill, uh, 12/11 is basically AR's technical correction bill we typically have these, uh, every session, what they do is they go through, uh, the codes and everything that uh they've dealt with, uh, in the last two years and they're like, hey, we had an issue when we dealt with this, so what they try to do is make technical corrections that deal with the issues that it wasn't really clear. On how they could deal with it. Uh, House bill, uh, 12/11, uh, As I've mentioned, technical correction, the items addressed or to clarify language for efficiency and administration. One, the first section deals with the definition of compensation and ensures categories of compensation, uh, that are added in the recent years to. two categories, lump sums and bonuses. Uh, they're included in the definitions of compensation. And then number 2, the other sections ensure the requirements to begin receiving a retirement benefit are consistent, uh, and they're in one section of the code. So there are certain steps that you have to take to make sure that you are, uh, have done everything for ARs. All the information supplied by the retire and then you get your retirement benefits. So this is just putting everything in statute with those two items. Right, um, So on page 3 of your bill, uh, it says starting on line 3. A retiree, a retiant shall not begin receiving annuity payments until all requirements for terminating qualified employment are satisfied, which obviously is like full. Fully retired, in other words. Do we have an example or what what brought this about to add this language, um. This is technical correction, clarifying law, but you said it was based off some sort of an example that has happened. We actually just struck it from uh on, on page 2 section 2, line 21, 22, 23. It's, it's really just being stricken there and moved to a different area, so it's all in one area because there's been some confusion. People would read one section, but not another, so we just put it all together. OK. Alright. Any other questions from the committee? Seeing none Uh, do you have anybody? Which is speak for or against. Seeing none, your recognized clothes for the bill. Thank you, Mr. Chairman. I am closed for my bill. I make a motion to pass. Our motion I have a second. Any discussion on the motion? Seeing none, all in favor, I. And he opposed? Ocean carries. House Bill 12/11 passes. Congratulations, you are now recognized to present House Bill 1304. Thank you, Mr. Chairman. House Bill 1304 affects the provisions of the Arkansas Public Employee retirement System. The first section of the bill deals with the member's responsibility for updating their contact information. The member's responsibility already exists, but this codifies it. It also details how and when the benefit is forfeited and when there is no communication from the member. The rest of the bill deals with the correction of errors of information in the calculation of benefits and how they are corrected. It also details how the correction of underpayments and overpayments are handled. A five-year limitation period for the correction of errors is also included. Uh, so in the actuarial study, uh, we have reviewed it, they say that they've reviewed the provisions of House Bill 1304, and the effect, uh, it would have on the benefits paid to participants in APRs, uh, the provisions of the bill will not affect the vast majority of participants. It does provide some administrative ability to more efficiently deal with the issues that can arise and should provide some administrative cost savings. The provisions of this bill will not have an impact on the benefits paid to participants and will not have an impact on actuarial cost of vapers. Be glad to take any questions. Right, so if I understand you correctly. You were saying that. If someone If someone stops communicating with vapers, whether it's the retirement or their designated beneficiary. Um You'll continue to make payments on that. Until 5 years from your last communication trying to. to reach them. Is that how that works? I want to go into. So, so we actually have a process for, for contacting members where we've, you know, sent a a benefit payment and, and the bank returns it, um. Yeah. Or we don't hear from the member. We're we're constantly trying to, to stay in touch with the member. It's part of our fiduciary duty, not, not to pay benefits to, um, you know, nobody, um, and so we're trying to make sure that if You know, despite all our efforts to continually communicate with a member, we've lost touch with them and we can't get anything with that, you know, after 5 years, that at that point that, that monthly benefit is forfeited up until, up and until the member, you know, up until 5 years, so if, if it, if it 4 years and 12 months, the member been contacts you then that restarts that five-year clock, right? And it's not just they're not communicating with us. It would be like if a bank account was closed and then we don't know where to send the payment. So we have, we have no information is bouncing back to you then it's 5 years from that date and you're, you're not actually issuing payments at that point for that entire period of time and I wanna add to that their continually trying to get in touch with these people. It's not like. The bank account got shut. Shut down and they don't try to get in touch with the people they go through the file. That the retiree filled out and they'll contact everybody in the file. That was mentioned. They do everything they can to get in touch. With the retiree or a family member of that retiree. This is when it's like all efforts have been exhausted. And they don't have a way of getting the retirement benefits to the people that are supposed to get them. So, um, And then after 5 years. They're they've been holding it. Do you just keep holding it? With no end and then also I want to add to If a retiree pops up after. 4 years Then they're gonna get everything that was due to them because it's being held in escrow for them and then we start. Monthly payments again, but Until that time, there's got to be a mechanism. That ends the. Continuous We can't get in touch with this person. And What happens with those that lump sum at the end of that, does that all given at once? To them if they contact or OK. I have a couple of questions here, Senator Love, you're recognized. Thank you Mr. Chair, and thank, thank you all for explaining it, but I, I guess I'm, I'm. Little caught here so after that 5 years, then, then you just forfeit all the benefits, is that what we're we're saying. So the way it reads is, um, you know, once you retire, you really only your benefit is just one month at a time, right? And so the forfeiture is that one month at a time. With that 5 year period. So, um, it's it. We don't know how long we would be paying a benefit into the future. So it's, it's just that one month benefit that we're talking about. You may have forfeited benefits. In the past, it was. OK, so help me understand you're not saying that they're just, they're just gonna forfeit altogether, it's just a certain period of time. Well, I mean, what, what do we I know I'm, um, I think, uh, Senator Warren, uh, was clear, clearer than I've been on this, um, the We We may start payments after an investigation. OK, but we are holding that to the account of the member. And if the member Pops back up within 5 years, then we send them a lump sum and we restart monthly payments. Everything's good, but if they never do pop back up. Then they are forfeiting after 5 years, those monthly benefit payments up and until they reach out to us again or if we find that, you know, that they're deceased, but if I reach out to you, just say, I guess my wife or whoever just reaches out to you afterwards and I'm just so happened I didn't get to you. In that five-year period of time, then I have. Forfeited just the, the 5 years of payments and then the payments will then resume. That is correct. What are we currently, uh, what, what, what is, what is, how do we currently handle this situation? We're currently just holding on, on the books in perpetuity. And, um, OK, so then let me ask you this. How many How many People has this affected? I mean, like, what are, what are we, what are we talking about? How often does this happen? There is it a common occurrence or is it I mean, how often, how, how often has this happened? I don't have an exact number. Excuse me, I could get some, get you some numbers, but it, it does happen quite regularly. And how much money are we talking about we've. We're, we're, we're holding for if we're holding it, it's just sitting in the trust fund and it's continually being invested. So holding it means it's, it's just in the trust fund. OK. All right, thank you. Right, uh, Representative Rye, you're recognized. Thank, thank you, Mr. Chairman. Let me ask you this. Let's just say that Over a period of 4 years. That you were trying to find these folks and they may have moved to 3 or 4 different states or something like that. Well, What happens to that trust fund, let's just say that it was $1000 a month. It was $12,000 a year. Would there be any interest on there or would it just be a flat amount? You're saying if they came back to within the five-year period. Yeah, I mean, let's just say that it was a uh 4 years and during that period of time that it was in that trust fund area, what would happen if it was Those folks were found out. Would it be just a set amount of money that would be sent to them each month under normal conditions, or would it be some type of additive due to uh And uh let's just say interest or something like that. So, um, to make sure I understand, you're asking if, if they came back when we paid them that lump sum, would there be interest accrued on the, the sum they were getting. Is that, is that what you're asking? That's exactly right, Amy. Thank you. Thank you, Mr. Chairman. All right, Representative Duke, you're recognized. Thank you, Mr. Chair. I've got a couple of questions if I may. Um, my first one is, so what is the problem that we have with it sitting in the trust or escrow when you're not able to find those people. What's the problem there with that? I wouldn't say there's a problem. So, so this kind of goes on both ends of, of a person's, um, retirement The main problem we have is that people come back. 20 or 30 years later. And say, I should have been an Apers, and I wasn't. I wasn't ever enrolled in ARs, but I should have been. And so then we're left to try to reconcile uh with a city or a county, you know, whether or not they should have been in ARs and how much that would be. So it's probably more of a problem on that end of it, then, uh, a member not receiving, not, not keeping us up to date and receiving their payments. So, make sure I understand, new to the committee and learning lots of things here, but, so the problem is more that someone's not enrolling somebody in it and thus they figure that out years later that they should have been enrolled and they're coming back and saying, hey, where's my money? Where's my retirement? That that is what we've been presented a few times over the last couple of years. So do you, are we addressing that end of the thing of the problem? Well, Papers, um, if, if you, if an employer is an APRs employer, it's, it's a term of, uh, a requirement of your employment that you're enrolled in APERS. We don't know if you're supposed to be enrolled in APRs. You know, if a city hires someone, they have to enroll them. So we just direct them back to their employer at that point, um, to see if they should have been or should not have been. OK, I have a lot of questions that pop to mind with that, but I won't ask all of those here. So my next question is, where is, if I, if I may, Mr. Chair, um. Where is the money gonna go? That it gets defaulted by these people. Where is that money then gonna go? It will remain in the trust fund. And It would be more of a bookkeeping. Uh, uh, correction is what it would be, but it, it would remain in the trust fund. You're basically going to have. Restricted funds within the trust fund. that As long as nobody is claiming them, they're going to continue to be in this fund restricted that cannot be used for any other purpose because. And it may be 40 years down the road that someone did not claim them. And, but they can't be used. Because Someone just left town, dropped off the map, whatever it is. And we've tried everything we can to get in touch with them. And that money is just gonna sit there without any benefit to the retirement system. But they can't claim it either. After 5 years, 5 years, that's, that's the block we're trying to put some kind of end to it. That, in my understanding, Y'all correct me if I'm wrong here if they pop back in. After 5 years, Would they be able to get their monthly benefit reinstated. Yes, that is correct. OK. So if they show back up again. They're able to get all of that money again. You're just not looking for them anymore. And say I, I find, I think I'm very confused at this point, and I don't know why I'm so confused. I, I guess my concern, I'll just try to boil it down is, I'm thinking about the great Arkansas treasure hunt and how we are looking and trying to find people and get them their money, right? And I've been a beneficiary of, of that, right? And so I'm trying to figure out for sure what is happening to people's money. I understand you've got one problem over here, but it sounds like maybe we're addressing a different problem with this that maybe even not so much a problem. I just, if you can reconcile that for me. That would be great, and I don't even know if I'm explaining the issue I'm having. I'm just trying to figure out where the money is gonna go, and why we see him after 5 years, OK. You don't get to get your money anymore. Please clarify because I'm sure I'm not understanding something. I think it's more that it's a liability, um. In the bookkeeping, uh, rather than It's an issue. So just trying to, to justify that. If they come back around, we've got answers. If they never come back around. It's just A restricted fund. Forever Forever, OK. But if they come back around 20 years later. They can retrieve that money or one of their errors. They can start retrieving the money again? No. Let me, let me I believe, uh, teacher retirement. has a 5-year look back. How does that work? Can I get my teacher retirement guy up here. Mark, if you would state your name for the record and, and you're Your memorization of the Arkansas team your retirement code would be greatly appreciated at this moment in time. Thank you, Mr. Chairman Mark White, Arkansas Teacher retirement System, uh, my memory is uh with that caveat, yes, it is 5 years as well, um, and of course we do that for a bookkeeping purposes so we don't have that. Infinite liability that's still on the books for all that time. There's also IRS issues involved in that under federal law, uh, we can't actually just take that away from an employee, uh, so that's why there is a provision if they show up they can't get it back, but we just wanna have that end date so it doesn't mess up the bookkeeping over all those years for someone who has disappeared for 20 years. No, you're not off the hook yet. Uh, so hope, I think with respect to your question then, because I think this is trying to mirror. Same as teacher retirement. If After 20 years, it's still in the system. They'd be able to Make a claim for that. But We're just trying to say, let us move forward. Without that liability. Go on and use it, but then if we have someone show up, we'll get them what they were due. But until then, Let us take that restriction off of it. Is that how you're Yes, sir. That's how I'll describe it. Because otherwise we're just gonna have a forever restriction on funds within the APRS Trust Fund or the teacher retirement trust fund. that funds retirement for everybody, and at some point. Uh I mean, if everybody that was in the retirement system was Do receiving retirement. We'd have this account. That would end up just being paid over to. The state Uh, because there's nobody to take it. So how much money are we actually talking about right now if this goes into effect and is an emergency clause that we would immediately write off the books that are 5 years or longer in a couple of weeks. Mr. Chairman Would you let us pull this one down and bring it back to you in a couple of weeks. Uh With those figures, um. I have one more in the queue Representative ride. Do you want to hold your question or do you wanna? All right. Do you have one sent all right everybody without objection, I'll let you pull this down. Thank you, Mr. Chairman. We'll get with them if you have other questions on this committee and that. Takes us to the end of the agenda, so hearing no other business, we are adjourned. Thank you.